A Japanese firm that turns 80 in 2025, Toyo Densen specializes in manufacturing pipes, ducts and other parts for air-conditioning systems, as well as accessories and installation tools.
It is our view that Japan is at a very exciting time for manufacturing. On one hand, we have had major supply chain disruptions in the last three years, caused by the COVID-19 pandemic as well as tension from the China-US decoupling situation. As a result, we are seeing many multinational groups try to diversify their supply chains with a focus on reliability. This is where Japan can enter; a country known for decades of high reliability, trustworthiness, and short lead times when it comes to production. Now, with a depreciated JPY, it is our view that there’s never been a more opportune moment for Japanese manufacturers to meet the pressing needs of this macroeconomic environment. Do you agree with this premise, and why or why not? What are the advantages of Japanese firms in this current economic environment?
As you’ve said I feel that Japanese companies including ours are in a great position to increase our international global competitiveness thanks to the depreciation of the JPY. Our business strategy is to have balanced production and sales, meaning that we are actually one of the earlier companies to start production overseas in countries like Thailand, China, and Vietnam. Throughout our company’s history, we have remained flexible in order to capitalize on currency exchange rates. When the rate is high we produce much more overseas and little domestically, and when the JPY is weak like it is now we increase our production domestically and increase our overseas sales. In fact, last year we started to receive a lot of contacts from overseas companies and to that end, we recently launched our English language website. The plan is to have a big launch of our overseas sales in early 2024.
In 2024 we will be dedicating our resources to attending overseas exhibitions such as an exhibition in India in February and another spring exhibition in Indonesia. As you can see the initial point will be Asia and from there we hope to tackle the global market. In terms of what products we will be showcasing, those will consist of our copper pipes and related items.
Could you give us more of an insight into the products that you're looking to showcase and these events?
The core representative product of ours is our copper-coated pipe. In addition, we have a number of joints and auxiliaries relating to air conditioning installation such as duct covers and exhaust bases. In particular, New Zealand receives these duct covers that are produced in plastic.
In 2009 you developed the CAT pipe, an aluminum alloy insulated pipe for air conditioners. What was the motivation behind the development of the CAT pipe in the first place and how is it superior to more conventional products?
The uniqueness of our CAT pipe is that it is very lightweight compared to copper pipes, weighing only one-third of the weight and having a low cost compared to copper pipes. This makes the CAT pipes economical, lightweight, and easy to install.
With the emergence of EVs now there is an expectation that there will be a shortage of copper so we believe that in the near future, aluminum might be the only viable option. Additionally, aluminum reserves are much more than copper meaning that aluminum is a good option for us to use as a material.
In addition to the products you handle, we know that you also handle products for other companies. Why did you decide to add trading capabilities to your business operations?
A strength of Toyo Densen is that not only are we a manufacturer, but we also have trading capabilities. Our business ratios consist of 30% direct sales to electric appliance stores, 30% for middlemen that offer electrical materials to installation companies, 30% to middlemen supplying construction companies, and finally 10% direct sales to installation companies. There is a huge demand for the combination of our products and related products.
For things such as fixtures the regulations are quite strict so rather than focusing only on our own production, we gather products from other companies and provide clients with a comprehensive solution which has enabled our services to be much better received by clients.
As a firm that does both manufacturing and trading, how do you foresee the evolution of trading in the Japanese sphere over the next five to ten years?
I personally feel that this trading firm culture is unique to Japanese business. Trading firms augment their ability with manufacturing, and manufacturing companies augment their ability with trading capabilities. That is because companies simply cannot say no to client demands. Whenever there is a request from a client, the company contemplates whether it is possible to manufacture within their own domain, and if not they will delegate that or find other companies’ products. Being flexible is the key to survival in Japanese business, and with that in mind, Japanese companies have evolved themselves to cater to the new and evolving needs of customers.
Our company has grown thanks to our clients. They are the end users of air conditioning installation and other electrical work. For example, let’s say we are producing water for customers. The customer might request that we use glass because it can make the water look more attractive and keep the water chilled. We cannot say no to that, so we will go and think about how we can achieve this for the customer. If we cannot manufacture this for the customer then we need to search the market and provide the best option that meets that need of the customer. This type of flexibility that I’m talking about here has led to our growth.
We first started off as a copper pipe manufacturer, but then we began receiving requests from our end users to make things easier for their work. Thus that leads to the huge catalog we now have.
Factory in Nara Prefecture 
Quality control room 
Factory staff
Japan is currently facing a huge challenge with the current demographic situation. It is the world’s oldest society with a rapidly shrinking population due to low birth rates, and this unique business mindset you’ve talked about is somewhat under threat. There are several issues coming out of this demographic situation including a shrinking domestic market, a labor crisis, and problems with technical inheritance. What have been some of the challenges your firm has seen as a result of this demographic shift and how have you been reacting to them?
Traditionally I think we have been too focused on hiring young Japanese men and this has resulted in us struggling to fill positions. However, when watching a TV program my mindset switched and now I believe that opening up more and avoiding being confined to just young Japanese men may open up new possibilities for the company.
There are lots of women and non-Japanese individuals that are capable workers. Having an open mindset and welcoming people regardless of gender or background will move us forward in new and exciting ways. We now have men and women from Taiwan, Indonesia, and even Vietnam. By being flexible and opening to more international labor we have been able to secure the talented human resources we need.
Our purpose is not to hire cheap labor from overseas, but rather we are seeking out talented and enthusiastic personnel to work here at the same level as Japanese. We want them to become part of our management and drive the company forward.
Ever since the Japanese government decided that the country must be carbon neutral by 2050, Japan’s industry has been outspokenly ambitious in both the setting and attaining of carbon neutral targets. What efforts are Toyo Densen taking to contribute to a more sustainable society?
As for SDG initiatives in our company, we provide equal employment opportunities regardless of race, nationality, age, or gender. For carbon-neutral initiatives, we are now attempting to create a horizontal recycling scheme where we recycle all of the components used in HVAC systems and make the same type of product out of them. Actually, this isn’t just limited to HVAC and extends to home appliances, washing machines, and refrigerators. We recycle plastics so we can renovate and renew similar home appliances. Our plan is to exhibit this recycling system at an HVAC exhibition that will be held in Japan in 2024.
This HVAC recycling seems like a domestic initiative. Have you considered eventually taking this initiative overseas as well?
Yes, we do want to expand this recycling scheme and our recycled products across the globe. Currently what I am trying to concentrate on is shifting the mindset of our employees first, basically explaining why this horizontal recycling scheme is important. This scheme will add more costs so it is a little difficult for the sales staff to understand. The point is not to reduce cost but rather to reduce the burden on the environment and contribute to environmental friendliness. In fact, I believe that in the next five years, there will be a new era where companies will be criticized for using virgin materials. In order to secure our position as a leading company it is important to implement this recycling scheme.
One theme we’ve seen that is very common for expanding networks and penetrating new markets is the idea of partnerships. Through the use of partnerships, companies can understand new regions and tailor their products and services to that region. What role do partnerships play in your business model and are you currently seeking any partnerships in overseas markets?
Our international strategy is to have one partner per country, so each of the countries we export to has an established local partner who does sales activities on our behalf. We also hope to expand our business of recycled plastic products by creating a consensus with local agents.
Earlier you mentioned that your first focus is Asia, so when it comes to Asia are you looking to open new factories or offices in order to complement your Taiwan operations which you opened in 1996?
Having a new factory is something we envision, especially considering that the price of copper is increasing in Japan and the number of companies that can make copper materials is on the decline. Finding new local partners that can supply new types of materials such as aluminum will be crucial to the company’s future.
Could you go into more detail about your R&D strategy and are there any new products or technologies that you’re currently working on that you would showcase for us today?
Currently, we are in a joint development project with a partner company creating attachment parts that enable anyone to complete HVAC installation. Conventionally you have to have certain training in order to do air conditioner installation, but with the new components we are developing we envision a society where anyone can do it.
By broadening ourselves beyond just the HVAC field we hope to increase our trading capabilities. Fortunately for that, we have many employees from overseas. Recently we established a new joint venture with a Tokyo-based company for an e-commerce operation. The aim is to create new opportunities for the younger generation so that they can take up the challenge of creating new businesses. We are trying to sell high-quality Japanese products through this new e-commerce channel.
Imagine that we come back in 2025 and have this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?
The goal is to finish development on aluminum-related parts and fixings and fully implement the horizontal recycling scheme I’ve mentioned today. My mission as the president of Toyo Densen is to create a company that is stable enough to pass down to the next generation of executives. The size does not determine the value of a company, rather it is the continuity and sustainability. Leaving the company to the next generation smoothly with the company in the best position it can be in is my dream and the role I need to play as president.
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