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Fine chemicals from GCI support development of electronics industry

Interview - November 24, 2020

Gun Ei Chemical Industry (GCI) is a leading Japanese chemicals company, with a core business producing plastic resins, synthetic fibers and other chemical products for use mostly in the automotive, construction and electronics industries. We speak with president Kiichiro Arita, who sees the company’s future growth stemming from supporting the development of the electronics industry.


How has Japan remained number one despite intense competition and what role has monozukuri played?

Some foreign countries may be skilled in copying Japanese products or their specs, but we value not only that directly related to production, but also supportive activities, such as 5S, and keep on improving these kinds of invisible supportive activities. In addition, we have customized our products based on the way of our customers’ usage.  This is what foreign companies may not see or do. Our practice of this over time is how we improve quality and reduce costs while keeping our competitive advantages. If we were to make general-purpose products, other countries could cheaply produce the same so our advantage has to come from the customized products. So we concentrate more on developing specific technology and also on equipment which makes it possible to produce specific products.


If there is something that defines Japanese monozukuri, its quality. How do you manufacture abroad and also ensure the same level of quality?

We manufacture products that are specific to that countrys market or customer base, each country has its own set of preferences. Thai customers use slightly different products from Japanese customers. The weather of that country and other factors, including what equipment is available, makes what is possible to produce also different. We aim to keep quality similar but sometimes demand is for different qualities to fit the price point of the market we are serving. 


Being a global company how do you plan to take advantage of the chemical industrys role in nearly every product and the major demand of the global economy?

Demand is definitely set to grow for the foreseeable future. We have a manufacturing facility in Thailand and India and we want to supply our product to those and other markets by adjusting to the customers' needs. The Japanese market is not expanding, but there are still many new requirements from the customers, like environmental friendliness and high functionality, so even in Japan we need to develop our products to fit these demands. That way we can add value to our current market and others by bring those supply solutions.


When it comes to entering emerging markets are you looking to create new customizable products or increase your client portfolio?

Well, actually the client portfolio abroad would be quite similar to those in Japan. Our clients mostly have been in the automobile, home building and industrial material industries. In India our customers are almost all from the automobile industry and it will remain basically the same for a while, but in the future, we hope to expand and deliver to the demands of other industries. 


Since your founding in 1946, what has been your main competitive advantage that has helped you excel?

Our main competitive advantage has been our corporate credo. Our founder learned and worked at other companies before starting Gun Ei Chemical, and he shaped the vision of our corporate credo based on what he liked from his previous experiences. Our motto is old but important to us. Its all about diligence, being lean, and rational. Previously, we had expressed being leanas savingbut found that lean fits more parts of our business in terms of what we use, spend, and the products we create and rationalism pertains to manufacturing, so it is definitely key to our business. 


What are some of the customized solutions that have been so important to maintaining your competitive edge?

Well our customers want to improve their productivity, so we offer solutions like reducing any curing time for the products and this keeps our customers with us and achieving their goals.  In addition, nowadays, if our customers need environmentally friendly products, even if this is a challenge, weve figured out some combinations and mixtures involving starch syrup which decrease the number of chemicals necessary and fits into the needs of the customer.


Can you give us an overview of your strategy and vision for the chemical product section of your company?

We think that the electronics industry will grow in the future with the rise of more electronic products, remote work, electric cars, AI and so on. We want to focus on developing electric materials that aid in developing those electronic products. Another direction for us is that as we face a demographic challenge in Japan, we have to improve productivity in manufacturing and so nowadays 3D printing for foundry materials. We took place in a national project of this and until now, we are developing 3D printing to aid in solving our countrys challenges. In a growing market like India, our strategy is to contribute to our customer’s difficulties in all ways. Recently, our sales have risen thanks to quality advantage. But most of customers in India still focus on low price. So every year, although we are improving our quality, we also try to make our products cheaper. Step by step we are learning the Indian way, and to be more flexible. 


Can you please tell us about the competitive edge of your newest product, and whether you have any more new products to share?

RESITOP is the brand name of our product and the competitive advantages are the customization of this product. We can meet our customers’ needs and requirements. A few years ago we bought a product license from Mitsui chemical, MILEX, a modified phenolic resin, which is good for high-performance friction materials. Previous MILEX sales targets were mainly Japan and US, but we are putting strength and focusing on expanding our market in Europe and Asia.


How do you operate your food product business?

Our founder started this business after a long period of pondering. There was a food shortage after WWII and he thought that maybe going into the food business would serve most people. Before the WWII, there was an airplane manufacturer in our home town, and airplanes used ethanol from sweet potato starch at that time, so there was such an abundance of sweet potatoes. It became our business to use them as raw materials for starch syrup. But after that, starch syrup was based on JAS Standard, so we needed to develop and produce functional products in order to change our portfolio.  Now we produce several syrups from many kinds of crops based on our customers’ needs, and syrup with moisture richness, and so on. 


For your food product business, what is your strategy and vision to grow?

We want to contribute to building a healthy society. Today we can make oligosaccharides that is good for your bowels and intestines. We also make a dietary fiber to contribute to peoples health. Not only for the food products but we also now use these starch-related products to make our chemicals more environmentally friendly.


Can you tell us how you are using R&D to tackle new fields and how do you hope to enter these new fields?

We focus on material development and product development.  With regard to material development, we try to make new material, such as for electronic material, and for product development, we try to produce and analyze products using our materials. In addition, our R&D team support our group company based on overseas customers’ needs. Our team challenge themselves to develop competitive products that meet the needs and wants of our existing and potential customers, and to develop products that support a sustainable society.  When we enter a new market, our R&D and sales team work together to research the new area that we want to enter, like for example healthcare and the electronics-related fields.


Looking towards the future, what is your midterm strategy to continue your growth?

The electronics industry is really important to us. I didn’t expect COVID-19, but even in this situation, the electronics market is growing so we expect it to keep growing during other more normal times as well. This means we need to develop new material and better quality for things like semiconductors. We also want to develop other food products to contribute to peoples health, like plant-based milk, dietary fiber. Lastly, we are developing 3D printing materials for better quality and for the aging society. 


From your involvement in semiconductors, what solutions do you provide your clients with?

For semiconductors, we always provide high-purity products with very narrow specifications. We are constantly being challenged though as we are requested to make the same technology with even stricter specs. Our competitive advantage here though is that its very difficult to copy our product specifications, because of the accumulated knowledge of our employees.


What is your international strategy?

Thai GCI, which was founded 30 years ago, will strengthen its technical service functions and restructuring its customer support system as a core base in ASEAN counties, aiming to become more global and local. In the expanding to the Indian market, we would like to contribute to the growth of India by not only utilizing the business way of Japan, but also adapting Indian ways of busines. We try to bond closely with our local existing and potential customers to research their needs, and our local team and Japanese R&D team also work together in order to meet the needs.


What role do the European and North American markets play for your company?

We already have our sales subsidiary both in Europe and North America. They play an important role researching advanced countries’ needs, and we are looking forward to expanding business in these areas. For this, we will need feedback from our R&D team to give solutions to our customers and think about what kind of new products we could offer. If we have the chance, we would like to build a plant or manufacturing base.


As this is more or less a family business, what would you like to tell us in two years if we were to return and interview you again? What would you like to leave for the next generation?

Our company is 74 years old now, so I sometimes think about our 100th anniversary. By then we want to be a company with a long history and lots of experience, but still be energetic and active with employees who work with a sense of fulfillment. Companies contribute to the world, we want to be more curious, proactive and collaborative.