Founded in 1953, TOYO Corporation is the leading provider of advanced measurement instruments and systems in Japan. The company is on a mission to provide original solutions to emerging industries such as automotive, telecommunications, and Electromagnetic Compatibility (EMC) around the world. In this interview, president, Toshiya Kohno, explains how TOYO’s commitment to creating original, innovative and high-quality solutions, along with delivering great pre and after-sales service and satisfaction for customers across its business units, provides a formidable business model for the company.
While in recent decades Japan has lost a significant part of its consumer base to regional competitors, such as South Korea, in electronic manufacturing, it still leads the world in highly advanced technologies. What is it about Japanese companies that allow them to succeed in such fields? What is it about the monozukuri in these highly advanced fields?
It is just as you mentioned that Japan used to be leading when it came to providing the world with manufacturing technologies on the level of mass production. However, in recent years, other Asian countries have pursued that technology and exceeded Japan in terms of mass-production or at least caught up. In that sense, Japan has switched its business model; we are not necessarily competing with mass manufacturers, but rather we can compete with our originality, our high quality, and our high functionality products. Not only that, but by really providing high quality customer satisfaction through the services and after-sales services we provide, we can lead the world. In the history of our company, we have seen this in real time.
Let me explain a story from my experience. In the 80s we sold certain measurement systems in Japan, and in the 90s we saw that such Japanese companies started to go abroad; especially to Southeast Asia where new systems were required to be installed in their manufacturing facilities. In the 2000s you started to see our competitors in China and Korea become our clients who needed the measurement systems that we were providing originally to Japanese based companies. In this way, we really see the trend of what you are talking about.
If we look at Japan as a society, obviously we know that it is changing drastically with its ageing population. We are increasingly seeing new technologies like IoT (Internet of Things), AI (Artificial Intelligence) and 5G networks being adopted to alleviate both the social problems related with the aging population, but also to continue economic development. While these changes are taking place in Japan already, they are not unique to Japan and are expected to affect many nations around the world in the coming decades. What can Japan teach the world about using technology and innovation to tackle demographic changes, and how will TOYO contribute?
Japan is slowly waning in terms of national economic strength, but it still has a strong standing in the global economy. I believe that the key for each country is to really leverage the strengths that they have, their unique strong suits so to speak, to support and contribute to the global economy. In the case of Japan, it has been very innovative when it comes to rechargeable batteries, for example, we see that Japan has been at the forefront of all-solid-state battery development. That is one field in which Japan can definitely contribute.
When it comes to rolling out new products in any field, what is important is to have systems for measurement and evaluation. That is a vital process, and we believe that TOYO can play a major role in this. In 2014, three Japanese professors won the Nobel Prize in Physics for their blue LED (blue light-emitting diode) invention, and they utilised our semiconductor measurement and evaluation systems in the process. In this way, we have always been supporting new materials, research, and development across many fields. Right now, we are putting our emphasis and focus into rechargeable batteries, EVs (electric vehicles), 5G, and autonomous driving systems.
TOYO is involved in several different divisions: automobiles, ICT, software development, and life sciences to name but a few. This is a very diverse portfolio, but what synergies have been able to create between these divisions?
The world of innovation is very hard to foresee, you do not know what the future will bring. However, to respond to whatever that may be, we believe that it is important to have several kinds of technologies at our disposal. In that sense, I can give you an example in the automotive sector. Until now, our systems were mainly dealing with measurement and evaluation of the noise and vibration of engines. However, with the technological innovation in the field known as “CASE”, the automotive sector has been changing. Today, you are looking at the connected car, detection mechanisms, the battery, and the EV motor. You have completely new products that require an entirely different set of evaluation and measuring systems. The approach we are taking is really being able to integrate all the different technologies that we have and combining them to create a total solution. To keep up with any change like this, we always maintain a diverse portfolio.
As we know, new vehicles are creating a greater demand for lighter materials. Can you tell us your point of view in terms of material development? Are you interested in new materials?
We are not directly involved with the materials themselves. More than the material level, we are looking at the component level, specifically, we’re looking at the inspection system for the new batteries. For example, for the Chinese market we take care of almost 100% of the ion performance evaluation of the LED flat panels that are utilised on TVs and smartphone devices. In fact, when you look at who is manufacturing these flat panels, it is completely dominated by China. Originally Japan used to be the leader in terms of LED flat panels, but it has shifted to Korea and Taiwan, and now to almost 100% China.
We saw that you partnered up with Keio University for research development and that you also have a laboratory in Kanagawa. What role does co-creation play in your business model? Can you tell us more about your R&D strategy and the products you are working on?
There are several ongoing partnerships that we have in progress, unfortunately however we cannot explain them in detail today. Other than Keio University, we make partnership agreements with such research institutes as the Institute of Physical and Chemical Research (RIKEN) and work proactively on research development together. TOYO provides a variety of cutting-edge measurement technologies to our customers and to keep doing so, we need to cooperate with research institutes that specialize in each field to grow our in-house development and knowledge. Speaking of universities, we have many PhD employees and some of them lecture at such universities.
One of your more famous in-house development products is your SYNESIS, used to visualize and analyse telecommunication, financial, government and enterprise networks. We know that in March 2020, you were granted a patent in the US for this product. Can you tell us more about your plans for this product and how you will adapt it for the US?
With regard to SYNESIS, it is something that is being sold not only in the US but we have already rolled it out globally in other countries too. In 2020, we delivered SYNESIS to Fermilab, a United States Department of Energy National Laboratory. In terms of our product, we can provide the network performance analyser without any packet loss even for the fastest networks, all with our patented technology in the US. We have a competitive advantage when it comes to this product, therefore we are proactively looking to expand it.
Kohno-san, I just want to finish by asking a little more about your international strategy. You have chosen quite strategic locations for your business, a Silicon Valley location and sales offices in Shanghai and Beijing. Why did you choose these locations and how are you going to leverage them to further expand your company internationally?
With regards to China, it is for expanding sales and marketing. We chose Shanghai because it was the easiest place to get to from Japan and after that, Beijing and Hong Kong. In addition to those, we are looking to open another office in either Guangzhou or Shenzhen. With regards to the US, it is not only for sales, but we also strategically chose Silicon Valley because of its environment; there are a number of different startups as well as unique companies with many opportunities for joint ventures. It’s a perfect environment to really pick up on information and explore new avenues.
As you look to further expand internationally, what about locations like ASEAN or Europe? Are these locations interesting to you and if so how would you expand there?
Currently we have distributors, for example in Singapore, Taiwan, Oceania, and some areas in Europe but our focus is the US and China now. In terms of the future, we would like to open offices in Europe and other parts of Asia as well.
Imagine we come back in two to three years to interview you all over again, what would you like to tell us? What are your dreams for your company? What would you like to have accomplished by then?
Personally, I have an interest in environmental sustainability, to lessen the impact of human activities, and to really be a company that is creating social value. Secondly, to become a company that is better known throughout the world, to be highly praised by society, and not just focus on sales and profit. I think that people the world over understand the value that we can provide to society. That is something that I am looking to really do during my tenure. In terms of business, of course to continue to expand organically in terms of the growth of the existing businesses and market, but even further to be able to allocate existing capital and assets and invest in a number of new business opportunities and companies in the sustainable business sector too.