Sunday, May 19, 2024
logo
Update At 14:00    USD/EUR 0,92  ↑+0.0002        USD/JPY 151,69  ↑+0.174        USD/KRW 1.347,35  ↑+6.1        EUR/JPY 164,16  ↑+0.143        Crude Oil 85,49  ↓-0.76        Asia Dow 3.838,83  ↑+1.8        TSE 1.833,50  ↑+4.5        Japan: Nikkei 225 40.846,59  ↑+448.56        S. Korea: KOSPI 2.756,23  ↓-0.86        China: Shanghai Composite 3.015,74  ↓-15.745        Hong Kong: Hang Seng 16.512,92  ↓-105.4        Singapore: Straits Times 3,27  ↑+0.018        DJIA 22,58  ↓-0.23        Nasdaq Composite 16.315,70  ↓-68.769        S&P 500 5.203,58  ↓-14.61        Russell 2000 2.070,16  ↓-4.0003        Stoxx Euro 50 5.064,18  ↑+19.99        Stoxx Europe 600 511,09  ↑+1.23        Germany: DAX 18.384,35  ↑+123.04        UK: FTSE 100 7.930,96  ↑+13.39        Spain: IBEX 35 10.991,50  ↑+39.3        France: CAC 40 8.184,75  ↑+33.15        

Chiyoda Tsusho: The leader in industrial piping for compressed air in the automotive industry

Interview - March 27, 2024

Established in 1971, Chiyoda Tsusho is a Japanese manufacturer of industrial piping for compressed air, with a tailor-made approach focused on client demands that has placed it at the forefront of the automotive industry.

BRAIDED HOSE
HIDETOSHI ISHII | PRESIDENT OF CHIYODA TSUSHO CO., LTD.

Right now is a pivotal time for Japanese makers. Policies like the US Inflation Reduction Act are forcing corporations to diversify their supply chains for reliability and to reduce country risks, with nations such as China. Japan is known for its reliability, advanced technology, and a weak JPY, so for the time being Japan has never been a more cost-effective option. This means that Japanese firms have an opportunity to expand their existing global market shares. Do you agree with this sentiment, and in your opinion, what do you believe to be the advantages of Japanese companies in this current macroeconomic environment?

Some of the advantages you actually mentioned in your question and we characterize these as natural possessions that Japanese firms have in their pockets. There are high-quality standards throughout the country and there is reliability in the supply chains here too. We don’t really define these characteristics as particularly unique since so many Japanese companies define themselves by these qualities.

 

You mentioned these qualities being in the possession of Japanese firms, however, over the last 25-30 years Japan has seen the rise of regional competitors from countries like China, Korea, and Taiwan, who have replicated Japan’s model of success but done so at a cheaper labor cost, thus pushing Japan out of certain markets, however, we do still see Japanese firms as leaders when it comes to niche, B2B fields. Could you elaborate more on how you believe Japan has been able to maintain leadership?

Perhaps it is hard for us to judge what are the excellent points of Japanese companies in terms of competitiveness within the global market. I think this is because we’ve never really had to think about this before since we have such a stable business here in the domestic market. Additionally, our company doesn’t have any factories outside of the domestic market which puts us in a position of unavailability to be compared to some local manufacturing companies outside of Japan.

To summarize we are in a niche market and we serve our client's needs when they require our services. I like to compare our company to an ointment that solves an itch that just won’t go away. Now while I do find it hard to define the exact points that make Japanese companies so fantastic, I do believe however that you have outlined some of them in your question, and these have always been in place since our company’s establishment.

 

You mentioned serving the needs of the local domestic market, however, given the Japanese demographic situation right now that is going to prove a challenge going forward. With a rapidly aging and shrinking population, Japan is now looking down the barrel of a labor crisis, a shrinking domestic market, and skill inheritance issues. What have been some of the challenges you’ve seen as a result of Japan’s demographic shift and how have you been reacting to these challenges?

It is quite an obvious answer to your question and the keyword here is diversification. Our firm has always been strong in the automotive industry, introducing industrial piping for compressed air for the automotive industry. We see changes as a whole in the automotive industry because of the problems you’ve suggested, and as such we are trying to brand out and diversify the business segments we cater to. Compressed air is limited to only the automotive industry and as such we are confident that we can find other avenues for diversifying our company as a whole. This is something we are taking keen steps in.

To answer your question in a more summary way, we do face a lot of challenges from this demographic shift, but at the same time, there are opportunities that sprout, especially if you are talking about diversification and moving into more diverse fields with our expertise in compressed air.

 

Do you have any fields in particular that you are looking to target or introduce your products to?

We are saying that we are trying to diversify, but the reality is always much more difficult than the theory. The challenge for us is finding a separation between our new ideas and the automotive industry since the Japanese automotive industry itself is ingrained into so much of the entire domestic market at large.

Some avenues we’ve explored so far have included plastic injection molding, welding, and robotics. These industries all require some sort of piping for compressed air, but again, although we are excited about future prospects, it is also difficult to implement these changes in reality.

 

You are right that it is hard to get away from the automotive sector since it is Japan’s major export, so with that in mind, are you looking to find customers or partners in overseas markets that relate to these new fields that you’d like to diversify into?

We aren’t really looking at overseas expansion, and right now we do not have this as a defined strategy. We have a policy in place that won’t allow for any of our employees to have a permanent place outside of Japan, basically meaning that if we want to conduct business overseas it is on a temporary, business trip basis.

 

We know that you export your products to a range of regions across the world including Asia, China, and the US. Are there any other countries or regions you are looking to introduce your products to on an export basis?

The answer is yes, however, the number one focus right now is on the domestic market in order to see better results here in Japan. Our approach has always been to have the customers come to us in terms of exporting products, so therefore we aren’t picky. If there is a need, we will conduct due diligence, and then follow that up with the export of potential products to a region.


 


Your firm offers a variety of different products when it comes to tubes and fittings. In a market where there are opportunities for companies to go to so many different suppliers, what makes your tubes and fittings superior to more conventional products? Why should companies go to you for their needs when it comes to tubes and fittings?

I want to take a very humble position when comparing our products to conventional products. It wouldn’t be a good gesture to boast about our company’s superiority over some of our competitors because there are so many companies out there that make likewise products. Each company has its own pros and cons, so instead we would like to talk more about some simple but persuasive things about our products. I think that to summarize our products simply, it comes down to performance, durability, and the versatility of our advanced materials which all allow our company to stand out.

It is important to understand that our product lineup is specialized, tailor-made products for our customer usage. There isn’t any sort of standardized production in that way, and we are actually approaching our production from the other direction; basically being super specialized and basing the products on the customer requests.

 

One product we found particularly interesting was one you released late last year, the Low Friction Tubing TE-LF, which uses a special polyurethane material that greatly reduces the frictional resistance of the tube surface and suppresses the wear of the piping when it comes to moving parts such as in robotics. What was the motivation behind developing the Low Friction Tubing TE-LF in the first place?

This tubing in particular did not go against our tried and true method of meeting with the customers and fitting a particular need or request that they have. As you mentioned, it is a low-friction type of tubing that utilizes polyurethane as the core material; something that was specifically requested by the customer.

I can give you a quick introduction to how our business operates. First of all, the request from the customer comes in, and this part is particularly important since we should comprehensively understand the problem that the customer is having. Most of the time the customer doesn’t actually give us the solution, rather they approach a problem and ask if we can provide a product to them that fixes things. We take those problems to our R&D site in order to create a prototype for them. If that solution works well for them then we add that product to our portfolio with the idea that if a solution works for one customer, it can work for others too. It is a trial and error, hand-in-hand approach with the customer along for the entire journey and so far it has worked out well for us.

 

In terms of R&D, are there any new products or developments that you are able to share with us today?

At this moment in time, there is nothing we can reveal since we aren’t working on anything major right now.

 

A lot of your products take advantage of polyurethane-based materials, but at the same time the Japanese government has stated that the country needs to be carbon neutral by the year 2050, and as such, the Japanese industry has been very outspokenly ambitious in setting and attaining carbon neutral targets. As a firm that does use polyurethane, what efforts are you taking to contribute to a more sustainable society?

Obviously, that is a big challenge. With polyurethane in particular it is an oil-based product and it is the responsibility of material procurement companies, not ours as a final product company. Those material providers are going to have to switch over to biodegradable materials and that can be a great challenge since the cost is twice as much. A lot of the changes on our end are going to come from the direction the market itself takes and we will be keenly analyzing those factors.

 

One way that companies can keep up-to-date with the latest initiatives and technologies for sustainability is through exhibitions. We know that your firm is no stranger to participating in exhibitions and in August 2023 you participated in a factory equipment exhibition in Osaka. Moving forward, what is the next event you are looking to participate in?

If there is a need then we will participate, however, that is going to mostly center around the domestic market. It is difficult to participate in international exhibitions as an independent Japanese company.

 

Imagine that we come back in 2031 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?

I would say my answer isn’t typical and in that respect also quite humble. Personally, I don’t really have many dreams and really the only one that I hold dear is to preserve our company for the future. We want to keep our position and hold it strong in the state it is in right now.

Personally, I’m pretty much the same age as the company, and in fact I was born just two months before the company was established. If I could reach 60 years of age by 2031 and I can stand before you proud of what I have achieved then I think my personal dream will have come true.

  0 COMMENTS