After intense R&D, Toto’s innovative whirlpool technology harnesses the power of water and gravity to maximize cleaning and efficient water use. Madoka Kitamura, President of Toto, outlines why he believes the future is very bright for Toto as potential customers experience and understand that all toilets are not the same.
Japan is truly going through an exciting time at the moment. In a period of global economic recession, Japan is making difficult choices to reorient its economy for a more globalized world, thanks to the economic paradigm popularly known as “Abenomics.” Why do you think Abenomics will succeed in ending two decades of poor economic growth and deflation, and what role does the private sector play in this transformation?
As you know, Japan is a powerhouse in terms of the economies around the world, and because we have had this long period of stagnation, it has negatively affected other global economies as well.
Abenomics is a way for us to bring Japan out of this state of deflation, and private industry is pinning great hope on this economic revitalization program.
Similarly, Abenomics is relying on private industry to raise incomes and take other steps that will help break out of this period of economic stagnation.
Japan believes this economic stimulus program is definitely our biggest opportunity to move on, and private industry supports Abenomics because we see it as the last chance to move out of deflation.
Also we need strong leadership, but Japan has a pattern of changing prime ministers on an almost annual basis.
We now have an administration that is actually going to remain in office, and it is setting its fourth mid-term and long-term objectives.
We have a chance for stability with this administration; therefore, I feel strongly about supporting the administration, so we have a chance to implement some of these economic strategies.
Indeed, Toto is one of Japan’s most respected and recognizable companies, and similar to Japan itself is going through a reorganization, to be a more global company by its 100th anniversary in 2017, through your V-2017 Plan. What would you say are the biggest challenges that you are facing to achieve this goal?
In our nearly 100-year history, what we have emphasized most is something our founder passed on to the second generation of Toto leaders.
In 1912, when the concept of public sanitation systems was not widespread in Japan, our founder Mr. Kazuchika Okura believed he could improve people’s lives by spearheading the use of high-quality sanitary ware products, which would, in turn, spur social development.
Mr. Okura’s vision of high-quality plumbing products was the driving force behind Toto’s foundation.
Today, Mr. Okura’s dedication to quality applies not only overseas, but in Japan as well. We want to manufacture products that our customers want. Unlike many companies, however, we do not make products that people replace every year.
Our customers buy our products and keep them for a long time – in some cases, 20 or 30 years. We need to manufacture products that are very high quality, so people want to come back and purchase Toto products again in 20 or 30 years.
When consumers think of buying a new Washlet for instance, they think of Toto because our quality is superior. We want to please not only today’s customers, but also their children and their grandchildren.
We want to have a good relationship through the generations. We enjoy the benefits of consumers buying our products, and they enjoy the benefits of our innovation and technology.
To some, our products might be seen as low-tech, but they change the way people live – for example, our tornado cleaning system.
Using principles of bio-mimicry, we were the first company to study the centrifugal cyclonic action of nature’s tornadoes and innovate it as a technology for a toilet that continually cleans itself.
When you flush the toilet, the water spins around the rim and bowl, cleaning them. Our tornado system makes it very difficult for anything unsanitary to remain.
It washes it away. Homeowners’ lives are made easier by reducing the time needed to clean the toilet. The environment benefits, too, as consumers do not have to use as many harsh cleaning chemicals.
Did Toto create this?
Yes, we innovated this whirlpool technology and brought it to the general public. Through an exhibition that is held every two years in Europe, our products have become known worldwide.
I am getting a little technical here, but do you know how the water flows around the rim?
The water itself only travels a short way, but by having it rotate 360-degees, the water covers more surface area, requiring less water to do the cleaning.
Consumers get a cleaner toilet using less water. We used a supercomputer to do the calculations when we developed it.
I read an interesting interview you gave, where you said you were going to invest 140 billion yen in the next four years, both domestically and abroad. You said that it’s necessary to “take risks.” Could you outline some of the risks that you intend on taking here with Toto?
Our toilets are very complex. They require an intricate structure to generate the centrifugal cyclonic action of the water spinning around the rim.
It looks like a simple action, but it requires a particular type of gas kiln to fire this kind of ceramics. It requires a heat-adjustable kiln – one where you can regulate the temperature very accurately.
We do not want to take products overseas that local companies can make for themselves. We want to take high-level technologies like toilets with the tornado system, which people will enjoy over a long period of time.
At first they may not appreciate the value. We may not get a strong response from consumers in the beginning.
But as they use our products over time, people will discover the benefits that they bring, and they will enjoy using them. Do you think that all toilets are the same?
When you mold a toilet from clay and fire it, it shrinks as much as 30% in size. You have to able to do advanced calculations to get the finished product that you want.
You have to be able to calculate the amount of shrinkage. In addition, each toilet bowl has a number of angles in it, and if you do not get those angles exactly right, the water will not flow the way it should.
A lot of manufacturers from other countries buy our products, and they try to imitate them. They think, “It is not going to be that hard. You just put some water jets in it.”
But they find that it is not that easy to make something as complex as a toilet that uses whirlpool action to harness the power of water and gravity to maximize cleaning and use water more efficiently.
How important is it to educate the world about the functions, about the potential, the environmentally friendly aspects of your toilets and your products, as you grow your international profile? How are you communicating all these strengths?
When we entered the US market more than 25 years ago for example, our toilets were highly valued because they used a small amount of water.
When American professionals and experts conducted tests concerning the amount of water used and the amount of waste removed, Toto was in first, second, and third place.
We still get a lot of support from these US experts and in fact very recently an article came out saying that a lot of the toilets in Las Vegas are our products.
The Washlet is another example. No one will understand how beneficial it is until they use it. When we first introduced it in the US, Americans did not see its value because they had not experienced it.
In Japan, we started by marketing the Washlet to families and gradually it gained market share. Then property owners started installing them in hotels, and now approximately 70% of new hotels in Japan all have Washlets installed in them.
We are in an age now when a lot of Hollywood stars, investors, and important people come from overseas to Japan.
Many Hollywood stars have visited here and became Washlet fans, but their endorsement still did not generate a boom in the US because our customers will not buy one unless they try it first.
With the Washlet, people do not tend to think of it in terms of high-tech or low-tech. If they have never used it, they will not understand how it will feel or how it will improve their lives.
You cannot just go out and explain its functions to people. You cannot simply explain that this is a high-tech product and has amazing features and functions. You can show them all the catalogues you want.
You can tell them that it is a great product, but they will not buy it. However, if they stay in a hotel where Washlets are installed, and they are curious and start playing with the buttons and experience it for themselves – then that is it.
Speaking of the US market, Lixil, your largest competitor, has moved aggressively into the United States with this acquisition of American Standard. How would you grade the importance of the US market, and are you working to increase your market share? Maybe targeting hotel chains in America to set up joint-venture partnership with hotel chains in America?
In the US, we work mainly with wholesalers. Of course we do outreach to hotels, too. However, when it comes to the Washlet, they think it is too much trouble.
They are afraid of running into complicated problems with it. So we are having a hard time getting hotels to install it.
But what is changing is that more foreigners are coming to Japan. Annually, we have around 20 million international visitors in Japan, and many of them use the Washlet while they are here.
They also see that Toto has an overwhelming share of the market here, which goes back to the quality, precision, and performance of our products.
When foreign visitors return to their home countries, they tell people about the Washlet. That is how the word gets out.
One hundred percent of the people we have talked to, who have tried the Washlet, are impressed by it – and many have been convinced to purchase one.
In Japan, as I said before, we started selling them to families, and then we went to the hotels. When Japanese consumers stayed in a hotel, they were already familiar with Washlets.
They knew how to use them. However, Americans staying in a US hotel, who have never been to Japan and never experienced a Washlet, will be hesitant to use one when they see it in a hotel.
Hotels’ management, if they do not know the product, do not understand its benefits. That has been a big hurdle in the past – trying to get people to actually experience them.
Sometimes we are asked about mergers and acquisitions, but our policy is that our customer is what is important. We are looking not only at our present customers, but customers 20 years down the road.
We are looking that far ahead when we design our products. We take pride in our high-quality manufacturing processes, and we also take pride in our relationship with our customers.
Toto focuses mostly on sustainable growth. This is very important and also essential to Toto’s success is its corporate culture of unwavering high standards, as well as being a “good company” and one that’s “providing a new day everyday to your customers.” Indeed, this goes perfectly in line with your global environmental vision, and also perfectly in line with the G20 summit, which we’re going to be addressing in our custom publication. How are you ensuring that this level of excellence will not be compromised as Toto continues to expand?
People who are using our technologies want something clean: they want a toilet that they do not need to clean themselves, that reduces odor, and operates quietly.
We use our toilets ourselves, so we know what our technology can do.
We know what people are looking for. Recently we built a plant in India, and we are manufacturing the Tornado toilet system there, and it is designed for people in India to use.
It may be more expensive than toilets made by local manufacturers, but when people realize how good, how clean, and how quiet the operation is, I believe we are going to grow there.
When we entered the Indian market, we invested heavily in the local economy and became a major provider of jobs for its citizens. It is very important that our Indian employees are the ones who manufacture the toilets for Indian consumers.
In India they are making great advances in wastewater treatment, and as that progresses, more and more people are going to be using products like Toto. Even if it takes time, we want people to be glad they bought a Toto product. We want them to be fans of Toto products.
As regards our global environmental vision, Toto is dedicated to helping to combat global warming. We have been adopting innovative manufacturing methods and supply-chain innovations, while expanding our existing efforts to reduce CO2 emissions through water conservation and energy saving.
The entire Toto Global Group is deeply committed to making people’s lives better, protecting the planet, and keeping our water pure.
At its core, Abenomics aspires to make Japan’s economy more global, and in many regards Toto is this case of success of a truly global company, and indeed this is one of the main reasons that the Japanese government has chosen you as an example and an embodiment of Japan’s virtues and aspires now to spearhead this movement to have your toilets “conquer the world” as they put it. How are you working with the government with this impressive strategy?
I am not sure I would agree with you on the government’s level of support. However, during the nearly 100 years we have been in existence, the Japanese people have come to recognize the quality of our products.
They know that we are not just pushing to generate more sales. Our investors tell us that we move too slowly. They would like to see us pick up the pace.
They would like to see us more involved in mergers and acquisitions. They want us to get out there and expand faster. But our products are not like that.
You do not look at them and become overwhelmed with enthusiasm from the first day. It may take years to really appreciate their quality. In China, the US, or Indonesia, it is taking time.
It is taking 10 or 20 years, but slowly the Toto brand has penetrated the local economy and people recognize it. I would like to ask you, do you associate a company that simply has a huge amount of sales with a good company?
We want to be a company whose products are loved by the country where we sell them. That is what we value.