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"We have been nurturing 'Seeds' of new business"

Interview - November 17, 2022

The Japanese company Kitagawa Industries is a market-leading specialist in the field of electromagnetic compatibility (EMC). Boasting over 60 years of expertise, it provides consulting services and products that prevent electric/electronic components and devices from interfering with others in their environment.

YOSHIHIRO HIRAKAWA, PRESIDENT OF KITAGAWA INDUSTRIES CO., LTD.
YOSHIHIRO HIRAKAWA | PRESIDENT OF KITAGAWA INDUSTRIES CO., LTD.

We would like to use Kitagawa Industries as an example to challenge this misperception that Japanese firms have lost their innovative quality in the eyes of the West. Can you tell us a little more about your monozukuri, and the strengths of Kitagawa Industries that allow you to compete in international markets?

I think that the essence of monozukuri is to convert technology into business value. Kitagawa Industries has cultivated a variety of technical expertise for over 60 years. I ensure that the company will be able to discover "treasures" from the existing resources to create new values.

 

How is that philosophy, or that definition, embodied in your own company’s activities? Can you give us an example or a more detailed explanation of how you see Kitagawa embodying this philosophy of taking technology and creating value?

Kitagawa Industries has set out a long-term vision to be a solution provider on a global scale. Strengthening our solution services is a matter of priority so we decided to work on the following two themes:  product development based on ‘Seeds’ and integration of core technologies.

Product development based on ‘Seeds’ – Challenges faced by customers could be either ongoing or expected to arise in the future. In addition to responding to the challenges based on customer needs, the company will further work on finding potential challenges to develop a product based on what we called ‘Seeds’ before they become issues, maintaining a good balance between ongoing and potential challenges.

Currently, a higher proportion of our products are developed based on needs. Given the rapid pace of technology advances, there may be insufficient time for us to provide high-quality solutions when a problem becomes apparent.

We are working to refine our knowledge and expertise from the viewpoint of what can be sold and what we can offer to make our customers happy, while also striving to predict changes in society, infrastructure, technology, and future products of our customers in order to be prepared for those changes. In other words, we have been nurturing ‘Seeds’ of new business.

Integration of core technologies – We are attempting to create new values by effectively integrating our existing core technologies. It is often mentioned that innovation will not be built from scratch but through a combination of technologies and ingenuity can turn out to be a driving force for innovation.

For example, electromagnetic noise and heat problems are inextricably associated with each other. We do have the ability to propose solutions for both at the same time. I think that the combination of noise and heat prevention technologies will generate a synergetic effect to provide new values.

I chose the word ‘integration’ as a key to describe this theme since I have a great deal of empathy for the concept of Shiseido's “Integrate” cosmetics brand. “Integrate” pursues the ideal beauty of each of the six body parts, i.e., lips, eyes, eyelashes, eyebrows, skin, and fingers, to eventually create the integrated ideal beauty for women. Kitagawa Industries has a variety of knowledge and technologies within the group. We will be able to achieve a better outcome by evolving our technologies and integrating them.

 

Could you elaborate for us on what you consider to be your core technologies or products or services that you would like to showcase to our international audience?

Our main focus is on consulting services for Electromagnetic Compatibility (EMC) countermeasures. It also coincided that customer values have been shifting towards an emphasis on “using services” in addition to “owning products”, mainly in developed markets including Japan.

Many EMC testing facilities are located around the world where customers can bring in their products for EMC testing. The main difference of our EMC center to others is that we have the ability to provide solutions for customers through the consulting service when an EMC testing fails.

On the other hand, the knowledge gained from such consulting activities is being applied to the development of our new products. This service is currently offered primarily in Japan so we are making various efforts to accelerate overseas expansion.

There are many companies that specialize in EMC testing or sales of EMC related parts, however, I recognize that Kitagawa Industries is the only company in the world that offers comprehensive solutions from EMC testing service, consulting service to suitable and reliable parts for EMC problems.

The ‘Integration’ approach first started with considering the requirements of our customers in their product development. They are likely to visit our EMC center to evaluate whether their products are compliant with various EMC standards around the world right before the mass production stage. Suppose a test result of a customer product shows incompliance with the EMC standards and the production schedule cannot be delayed, the customer must be rushed to take countermeasures in a very short time to meet the EMC standards.

Engineers at customer companies are likely to have limited experience in EMC countermeasures. We have highly qualified technicians and engineers at our EMC center and can offer a solution by providing appropriate advice on how to comply with the EMC standards. Our consulting service enables our customers to facilitate countermeasures and realize their products, and if they are willing to choose our products in that process, it will be great for us.

We will continue to make active efforts to further develop this business model which leads to the eventual sale of our products through such consulting services by fully leveraging our strengths in EMC.

 

What would you say is your main clientele? We know that you focus on energy, medical, automotive, personal computers, electronics, all kinds of different sectors. Is there a particular sector or market that you're looking to penetrate further or to focus on as part of your mid-term strategy?

We are now placing particular emphasis on the device market with power converters, actuators, and servos where unintended EMC and heat problems are likely to be issues. Our products are targeted to be used for those devices equipped with motor vehicles, home appliances, industrial equipment, machine tools, and semiconductor manufacturing equipment.

As for motor vehicles, electromotive vehicles (xEV) are equipped with power conversion devices such as DC-DC converters, AC-DC converters and devices with servos. Regarding home appliances, inverter technology is currently incorporated into many air conditioners so that noise can become a problem. Devices used in industrial equipment, machine tools, and semiconductor manufacturing equipment are also likely to have EMC and heat problems arising from inverters and actuators.

Moreover, we plan to expand the business to include medical and environmental energy equipment. In fact, inquiries and sales related to those fields have been increasing in recent years.



Are there any other particular locations, whether it be Asia, Europe or North America that you're looking to target, and how will you find collaborative partners in those localities and set up sales offices and testing sites? Could you tell us a little more about your international strategy?

Our overseas business has developed, being aligned with the growing demands of our customers that transfer of production overseas. Therefore, most of our customers are Japanese companies operating in China and ASEAN countries, with the exception of Germany, the U.S., and Taiwan.

Kitagawa Industries wants to diversify its customer base by capturing untapped foreign customers particularly in China, the USA and European countries. We will strengthen marketing efforts to attract new customers in the field of noise suppression for a start hoping that consulting services will contribute to create greater opportunities for the eventual sale of our products as I mentioned earlier.

Regarding how to find collaborative partners, we already have overseas partners such as manufacturing contractors and EMC testing facilities that assist us when our overseas customers want EMC evaluations. We have started discussing with them to seek for further collaboration.

 

You talk about wanting to diversify the customer base to have more foreign companies as well as Japanese companies, and you mentioned the main hurdle to that being the lack of having a value-added consulting service in another language. What is your strategy or approach to convince these foreign companies to go with a Japanese company for their EMC services rather than companies that they may be more familiar with in terms of culture or language?

Japanese companies currently occupy 80% of our overseas sales on a consolidated basis. Kitagawa Industries intends to increase earnings from both Japanese and foreign companies. Let me start by talking about how the company can expand our overseas clientele of Japanese customers.

Traditionally, our overseas business with Japanese customers implied the sale and delivery of our products to their manufacturing locations. Their parent company in Japan previously determined the parts to be incorporated into their products due to a division of roles such as design in Japan and production overseas.

The situation has changed for over a decade. Japanese companies have been expanding R&D capability at overseas locations, recruiting and developing local human resources to consistently carry out the processes from design to production.

What we are trying to do now is effective utilization of our local staff to provide EMC solution services for local people involved in the R&D of Japanese companies particularly in China, Thailand and Malaysia.

In the case of Japanese companies, they are familiar with Kitagawa Industries and it is relatively easy to make an approach to their local engineers. We hopefully extend a business model that is effective in Japan, and our local staff are ready to have talks with local engineers of customer companies in the same language.

Even with Japanese companies, they do not immediately request us for consulting on countermeasures. As a preliminary step, we ask their local engineers through their Japanese expatriates to attend free EMC seminars conducted by our local staff in Thailand and China. These activities will enable us to show our ability to resolve EMC problems in terms of both consulting and parts offering while facilitating our solution service to reach customers who need our skills.

In order to succeed on the global stage, it is necessary to educate and train our local staff at overseas locations, and our staff in Japan also need to learn the forefront of business practices in target countries including local needs, business customs, and cultures. Recently, an attempt was made to exchange views between overseas and Japanese staff to deepen mutual understanding. Japanese staff also provide remote assistance on EMC countermeasures to local staff in order to offset the lack of on-site visits to overseas locations due to the spread of COVID-19.

Specifically, we provide our local staff with EMC devices and training on how to use them, and both EMC centers in Japan and local staff are working together online on noise suppression to support customers and encourage them to adopt our products by offering such comprehensive services. It is important to discuss with local staff how to provide consulting activities applicable to local business practices, rather than simply bringing a business model effective in Japan.

When the efforts pay off, Kitagawa Industries will be able to be better known not only for its products but also for its services and penetrate the growing xEV market particularly in China and even Europe.

Japanese companies currently occupy a large proportion of our overseas business, however, I ensure that our local staff will better gain a lot of experiences and knowledge from the communication with those Japanese companies, and that will eventually lead to business with non-Japanese customers.

 

Let's say we come back to interview you again in three years' time for your company’s 70th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe, and what would you like to have achieved by then?

For one thing, I hope that a series of our efforts mentioned earlier for converting technology into business value will finally bear fruit and we will do business with foreign customers in addition to Japanese customers.

The other is that our ongoing research project for development of water positive technology, which aims to replenish more water than we use, will hopefully become useful to society.

Being water positive is also a goal of the SDGs to overcome the global water shortage, and the company has been working with Distinguished University Professor Morinobu Endo of Shinshu University for about 10 years on a study of water purification system that desalinates seawater as industry-academia collaboration. Indeed, in industry-academia collaboration, it is sometimes not easy to produce business value, however, I hope that we will manage to exploit the accumulated knowledge and technology for our future business.

More specifically, we are working on the  development of spacers and fouling-resistant spacers with organic and inorganic substances protection that requires little maintenance. The feasibility study is underway in Saudi Arabia with the aim of commercializing these spacers used in water purification systems.

Professor Endo, a highly recognized authority in the field of carbon nanotubes, had a close friendship with our founder, Koji Kitagawa, and the company has built a close relation with him for over 30 years. One of our engineers did research on fouling-resistant spacers in the laboratory of Professor Endo, and one of his papers was published in a Nature journal about three years ago. He obtained a doctorate from Shinshu University and is now working on a project to pursue the early practical applications of fouling-resistant spacers.

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