Heisen Yoko is a major Japanese trading company that specialises in distributing chemicals used to manufacture rubber, polyurethane and plastics.
Could you give us a brief overview of the origins of your company, and how it evolved to where it is now?
Our company was founded in 1920, and we first started importing chemicals for rubber from Bayer in Germany. At that time, Japanese companies were using inorganic chemicals to make rubber, and it took more than one or two hours. However, by using this organic type of chemical, it only took 5 or 10 minutes, so many major companies started to shift to the organic type of rubber chemical, and we were the providers of it. This product’s name still remains even after 70 years.
Our company was established in 1920 as the agent for Bayer’s organic rubber chemical, and it was successful because Japanese companies at that time were using inorganic chemicals and wanted to shift to organic chemicals since it took much less time to cure the rubber. In the end, we did not need to do any sales promotion by ourselves because the chemical itself got so popular among Japanese industry. We basically were acting as the agent for Bayer, and that has been our main business, our sole business, and we did not have any mindset to expand the company.
However, after World War II, since we were not able to obtain foreign exchange quotas overseas, we had to close down for about four or five years. Then in 1950, the company resumed its operations, and since then, we have still maintained a good relationship with, and work as an agent for Bayer, but at the same time, we have been increasing our business portfolio.
After resuming as an agent for Bayer, they introduced us to many other European chemical related companies, such as BASF, Goldschmidt, Impatex and Rhein Chemie, and we imported distinctive products and evolved them to match Japanese companies. In due course, we not only started to provide the chemicals for the raw materials of the rubber, but we also started to deal with machineries of measurement devices of the hardness of Wallace.
One thing we did not enter into, however, is production machinery, since the production of materials and those devices require maintenance 24/7. We are not focused on producing and dealing with the finished product, but providing the materials that are needed in the production of things like foaming agents and adhesives for polyurethane.
The Japanese chemical sector has suffered when it comes to the production of base chemicals due to regional competitors lowering their costs. However, we know that Japanese chemical manufacturers are leaders when it comes to highly functional and specialized chemicals. Furthermore, Japan can count on a variety of chusho kigyo’s (SME’s) who can develop niche chemical and material technologies. What is your take on the current strengths and weaknesses of the Japanese chemical industry?
The Japanese chemical industry has its strength and uniqueness in a specific field that is more of the advanced type of chemicals. The reason why the Japanese chemical industry has evolved is thanks to the Japanese industrial structure where there are automotives, copying machine companies, robotics companies and also tire companies. There are many advanced, major companies that are up in the global market. Together with the evolution of these major companies, the chemical field has grown to be able to provide the fine and advanced chemicals that these industries require. Thus, Japan is still able to do well when it comes to specific chemicals, but as you say, for mass produced chemicals, China and Taiwan are the major players. Japanese companies are now more focused on the niche type of advanced chemicals.
Japanese companies are always required to go through Kaizen, or improvement, and have the best quality product across all the industries. For example, even products like less expensive ones from China or Taiwan come to Japan, and these products sometimes may be contaminated or are not of adequate quality, to the point of being unusable in industry. On the other hand, Japanese companies are reliable, and provide the best quality every time. That is the requirement of the Japanese market. Also, major Japanese companies are going abroad and together with them, chemical companies are also going abroad to provide materials and the necessary chemicals to the major companies.
For a rubber and plastics company like us, we are always under this requirement of improvement, and by answering to the specific needs of each company, we were able to uplift our technology. Recently, many Japanese companies which we work together with have been going to China, so we established our base there to provide our products to the Japanese affiliated factories there.
I feel that Japanese characteristics and traditional upbringing has an impact on the products that Japanese companies provide. From when we are small, our parents have always told us to make sure that “Do not cause any trouble to others, and make sure to value things and make maximum use of them”. However, in China I heard that they are taught by their parents not to be deceived by others, and in Korea they are told to win over others, so this Japanese mindset of being mindful of other people - not to cause any shame - has led companies to focus on the best quality of products that can be provided to others. That is my personal opinion.
We know that part of your focus on SDG’s involves the development of Seabin as well as the Jellyfishbot, which is a cleaning robot that collects garbage floating on water surfaces. Can you tell us a little bit more about the Jellyfishbot and the Seabin, and what were some of the challenges you had to overcome in their development?
Briefly to continue the background story of our company history, we were heavily dependent on Bayer’s rubber chemical. However, Bayer sold their other divisions to specialize in pharmaceuticals and agrochemicals. The rubber division was sold to other European companies, so we no longer have our business connection with Bayer.
At the same time, there has been growth in the industry, so there are many rival products that we have been dealing with, and it has now become not competition on quality, but more on pricing. Around the 1970s when the oil shock happened, we had set our company strategy to find new business divisions and start investing and find a stable income and profitable source whilst adding value to our current products. Also, securing personnel and training to increase the human capabilities of our staff members and focusing on the international business.
We established a new division that focuses on business planning. It was whilst looking for new potential businesses that we encountered Seabin and the Jellyfishbot, and this asbestos detector. It is not that we first had SDGs in mind, it was in the course of finding new types of business where we could penetrate and enlarge, that we started up this environmental business. At first, our focus was collecting the plastic rubbish that was floating in the sea, but now we have been working and collaborating with a professor at the University of Tokyo to take this ocean trash and convert that into concrete materials. There has been an announcement recently on TV to take this ocean trash and convert that into concrete.
Many of the products the Heisen Yoko group handles are utilized in various different applications. You have oil seals, rubber and plastic testing, polyurethane foams, as well as automotive. Is there a specific application you are currently focusing on, and which do you believe has the most potential for growth?
We have a production facility through our subsidiary H&K, and this company was established together with a European company, and it was a joint venture, 50-50. With European companies, there is often a buyout, and the company - our counterpart - got bought out by Dow Chemical, and They did not want to keep H&K since it was too small, so they forced us to purchase them and be the full owner and we had to pay 10 times the amount of investment that we had initially planned.
The reason why H&K was established as a joint venture is that its location is in Japan, and that is because the purpose was to provide battery case adhesives, and these adhesives needed to be produced in Japan for domestic companies, so we established this company.
After we bought it out, we became the full owner of H&K and we started to open up to a new type of production. Currently, we have a number one share in the casting material field, and our product is in China, Mexico and Australia, and almost everywhere in the world.
The ideal business model that we are trying to create is that we want to provide what is required by each company with the best of our capabilities as a trading firm, and also, we have a manufacturing plant to be able to cater to the specific needs of each customer. Sogo shosha’s (general trading companies) take care of everything from A to Z, from development to product finishing. However, we want to be a company that can work together with others at certain points. For example, if there are steps from 1 through 10, we could work together with them even if it is only a few steps.
Many of the products that you offer through your subsidiary H&K also serve the automotive market, which we know is undergoing a great time of change with the switch to EVs from gasoline vehicles, and as a result of this switch, many components in a traditional vehicle will no longer be needed. As this switch to EVs continues to take place, what opportunities do you see for your firm?
With the shift to EVs, the rubber components used in engine or motor drives, such as rubber belts, are no longer needed. However, the rubber sealant for the body will still remain so we do not see a change in our provisions, but at the same time, we listen to the requests of our customers to make items more lightweight, more highly functional, highly durable, and also weatherproof. These are some of the key characteristics that are coming up as new requirements, but the bulk of this development is done by our customers. We provide them with whatever is needed to do that.
Currently at H&K, we are doing research and development on battery case adhesives. The battery case is made of resin, and we are trying to develop a type of adhesive that is the most appropriate. I do not know the usage but heat resistant rubber has been in increasing demand. Currently, we are importing a German heat resistant rubber, and many Japanese companies want to use it, but the company does not have much production capability in this regard, so there is scarcity. Globally, there are only two companies that can make heat resistant rubber, and they are a Japanese company and a German company.
Are you looking for partnerships in the international market?
Actually, it is not that we are seeking a partnership, it is that other companies or municipalities are wanting to partner with us. For example, there is a certification that we received - a thank you note - from the governor of Kanagawa Prefecture. In the field of SDGs, we have many municipalities that want to work with us such as Nagoya. In terms of the asbestos detector, there are many construction companies that want to partner with us, so we feel there is competition amongst them to be our partner.
Moving forward, are there any countries or regions you have identified for further expansion into, and what strategies will you employ to do so? Could you elaborate more on your international business strategy for us please?
We are willing to expand overseas on the basis that since the Japanese market is shrinking, especially in the rubber industry, we need to go abroad in order to sustain ourselves. In order to do so, human resources are essential, and personnel need to be able to speak English, know about this industry and this company and have the specific knowledge that is needed to conduct the production and sales. If we provided training in English for three years, they would become fluent, but at the same time, we have to train them to take care of international business too, so we are currently focusing on this training and educational aspect and developing talented employees.
How would you describe your ideal business partner?
We have friends across the globe. We have an office in the US, Australia, Germany, France, England and Netherlands. We have good information sources. We have good friends, and we provide information to them. We keep telling them that “soon we will have a branch in your country”.
Currently, we have good enough partners, and whenever we need any specific information on a specific country, we can ask and they provide it to us. As an SME, we have to find a field that provides good profits. We will target the US market in the near future but taking the full cost of the marketing all by ourselves is too much of a burden, so we find local partners to work with.
Is there a specific field that you have in mind that you see as a new business opportunity for the future?
We are trying to enter new fields, but we feel it is difficult since 80% of our rubber related products are for automotives, so we have to stay within the industry. Railway, actually, is a new field that we are looking into. H&K’s production capability has advanced to the point of being able to cater to that industry.
Imagine we come back to interview you again on the last day of your presidency. What would you like to have achieved by then?
The next generation of company management is about the age of 50, so there is about a 25–30-year difference that I have on the next generation of employees that could potentially be the next president. If I say something old-fashioned, that would not be highly appreciated. I want to focus on the basics of the companies, the basic principles, and pass that spirit down to the next generation’s president as well as the employees.
Our principles are the following: goodness to yourself, the company, goodness to others, who are our customers or business partners, and goodness to society. In fact, these three reflect the values of our SDGs, so taking a good balance of these three is important. At the same time, the company needs to keep growing and keep earning profits for sustainability, or else you are not able to support the lives of employees and business partners, so if the chemical industry is not doing well, we need to find new business fields.
Although growth may be slow at first, if you continue, you will eventually be able to play a role in the market, and that is how we have been growing. I want to pass down this knowledge of how to keep the company growing.