Though Kinboshi’s primary business in Japan revolves around security equipment and uniforms, the firm, which was established in the late 1940s, is involved in a wide range of businesses both at home and abroad.
Japan has been known for decades for 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?
Regarding production, we do have consignment partners in China. This is in addition to our existing production facilities in Japan, and the logistic disruptions caused by Covid-19 definitely did impact our operations. At this time, relocating the entirety of our production back to Japan would not be economically viable in terms of price competitiveness nor would local manufacturers be able to produce sufficient volume. Similarly, relying solely on a single consignment partner is not the most feasible option due to the perceived risks caused by geopolitical instability. We learned during the pandemic, as we observed the situation our consignment partners in China encountered including disruptions caused by the COVID-19 pandemic among other various issues. Notably, the Chinese government's requirement for visas even for business purposes has compounded existing travel and communication challenges. Additionally, the unpredictability of the Chinese government's stance with regards to businesses poses further concerns, with little recourse for us in such situations where sudden changes are implemented. Therefore, it is imperative for us to explore alternative production bases outside of China. Presently, Kinboshi is actively considering other Southeast Asian locations as viable solutions.
As an example of this, I personally visited Bangladesh to gain insight into their garment and sewing factories. As a company, we are deeply invested in diversifying procurement sources. Our strength lies in direct sales to customers, which enables us to gain a comprehensive understanding of their needs and respond promptly. Establishing a stable supply chain system allows us to better serve our customers.
You mentioned there the importance of finding a new production base and diversifying your procurement channels, with Bangladesh seeming like the most suitable option. Why are you considering Bangladesh and how soon do you expect to be producing at this new site?
Bangladesh definitely is an option but we are scouting various locations throughout South East Asia. As of now, no final decisions have been made, and it's worth noting that we already have an established production base in Vietnam through one of our partners. There is a prevailing notion that the sewing industry is shifting westward possibly as far as India and all of these new production hubs must be considered as potential opportunities for diversification of manufacturing. However, it's crucial to exercise caution, as venturing further west may pose certain risks. It is plausible that Bangladesh or India could become the boundary where the sewing and garment industries find stability. My primary motive for visiting the region was to gain an in-depth understanding of the current situation and explore the feasibility of achieving stable production of our products there.
For expansion into Bangladesh or India are you going to continue with this consignment system or are you going to establish your own Kinboshi base in Bangladesh or somewhere else?
At present, our vision is to maintain our current consignment arrangement with our local partners. We have already been working closely with partners in Vietnam. This entails dedicating one of their production lines exclusively to our needs, thereby mitigating the risks associated with overseas production. Given the diversity and customizable nature of our products, we encounter various logistical challenges when trying to consolidate a large number of orders. It is our opinion that a consignment approach is necessary to both reduce risks and ensure a stable and secure production process.
Could you walk us through your rental system, your monitoring system, and how you are helping your clients achieve their sustainability goals?
Regarding our Management Contract Service , we specialize in monitoring, managing the usage of, and helping our customers identify product waste thereby minimizing the number of uniforms that need to be purchased by our customers. This approach results in cost reductions for our customers and helps to minimize the waste that would otherwise be created due to over purchasing or poor uniform maintenance.
Our efforts go beyond just purchase management; we emphasize product durability, allowing for an extended usage timeframe. Naturally, every Uniform has a life expectancy, and when a product reaches its end-of-life cycle, Kinboshi assesses whether conventional recycling, repair, or reuse is possible. We have been working in collaboration with a company capable of helping us to upcycle security uniforms into other functional products.
The distinguishing feature of our business lies not only in the total support we can provide after purchase, but in the fact that Kinboshi assumes total responsibility for the assets. Unlike typical cases where customers purchase assets and assume responsibility, we sell assets to our customers and actively manage and enhance their durability. These services range from cleaning and maintenance to storage and inventory management assistance. It is essential to note that customers are not obligated to buy uniforms exclusively from Kinboshi; they may acquire uniforms from other suppliers while allowing us to handle the management services on their behalf. Of course, we always encourage customers to purchase directly from Kinboshi whenever possible.
It seems as if you offer a very comprehensive after-sales service. We know that Japan is probably your main focus, but do you have any ambitions beyond Japan? We know that you have an operation in France and are considering the United States in the future. How are you going to offer the same level of service to your clients in those overseas markets as you do in Japan?
While our primary business in Japan revolves around security equipment and uniforms, we recognize that given the differences between security service providers in France and the United States the Japanese business model cannot be universally applied. As a result, our current focus is in France and launching our Ultra-Fine Bubble Generator, known as the PURETE.
Notably, in 2019, discussions were underway for a trial period of the PURETE at a facility in France; however, due to the impact of COVID-19, those plans were unfortunately delayed. Nevertheless, we are fully expecting to launch our PURETE business in France in the near future.
Your company has an incredible amount of diversity in the types of businesses you conduct, even if the uniforms and the equipment are at the core of your company. What would you say are the synergies or the overlaps you can create between these different business segments, and what motivated you to enter so many different businesses?
The core mission of Kinboshi is to make significant contributions to society through our business operations, focusing on three pillars. We prioritize the social and natural environment, along with the living environment of individuals. Our primary business centres around security-related equipment and uniforms, aligning with the social environment pillar as it indirectly enhances safety and security through collaborations with police and private security firms.
The development of PURETE stemmed from our desire to find a more efficient method to clean uniforms. Over time we realized that through the application of ultra-fine bubble technology we could eliminate the need for detergents altogether which could also help the environment. While we were pleased with the reduced detergent usage and positive environmental implications, we were unable to achieve total success in this area due to the diverse range of potential uniform stains. However, from this Kinboshi learned a lot about the potential applications of ultra fine bubble technology.
Currently, we are actively exploring new applications for PURETE based on our established history with the technology. Some of our security firm partners operate welfare divisions managing nursing homes. As we listened to the issues our partners were experiencing in this sector, we proposed PURETE to improve the efficiency of the patient bathing process. PURETE is already playing a crucial role in these settings, facilitating bathing for individuals who have limited mobility. This application not only contributes to labour-saving efforts but also enhances living conditions for patients.
Our sales approach at Kinboshi remains focused on direct engagements, allowing us to forge new paths and discover innovative business opportunities. We frequently offer product trials, confident that the experience will lead to increased interest and eventual adoption.
Powder feeders represent another significant aspect of our business. Customers in this sector have lauded our powder feeders for revolutionizing their manufacturing processes. Strengthening and expanding this area of our business is a priority, enabling us to provide comprehensive solutions to group companies beyond security-related subsidiaries.
The fact that you have been able to successfully diversify speaks to a very strong R&D mindset, and we read in our research about all kinds of different ideas and initiatives. What is the current focus of your R&D, and are there any new products or technologies on the horizon that you would like to share with us today?
Here at Kinboshi, we thrive on embracing new challenges and exploring innovative ventures. However, we acknowledge that not all endeavours have yielded the desired outcomes. For instance, our Solar Luminary System did not achieve the expected success, prompting us to redeploy human resources to more promising projects. Consequently, we have decided to suspend further research into the Solar Luminary System.
In response to valuable feedback from our customers, we recognized the issue they face when working during the summer when odors and bacteria can become a concern. To address this need, we developed a specialized spray utilizing unique technology that effectively mitigates unpleasant odors and eliminates bacteria. This product has garnered particular popularity among companies where bacterial and odor control is a prominent issue. We recently began using this technology to help with deodorization and bacteria control at one of the most prestigious hot springs in Japan.
Looking ahead, we have embarked on projects involving robotics in response to the challenges posed by an aging population and a shortage of domestic labour resources. We firmly believe that introducing automation and labour-saving alternatives is crucial to driving the economy forward. While our core business remains centred on uniforms, we are keenly aware of the potential impact of a declining population and actively seek to diversify our business ventures in accordance with our values.
Imagine that we come back in 5 years and have this interview all over again. What goals or dreams do you hope to have achieved by the time we come back for that new interview?
It is my philosophy that long term success can only be achieved by maintaining our core values and not through the pursuit of profit alone. I firmly believe that as a company if we embrace and stay true to our values, customers will respond to our authenticity. This is the approach Kinboshi wants to take to drive our business forward and hopefully, in 5 years' time, we will have the opportunity to share our passion and values with customers outside of Japan as well.