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High-quality, high-performing valves built to operate in most demanding conditions

Interview - November 22, 2023

Established in 1949, Ichinose specializes in the manufacture of high-quality, high-performing valves created using the company’s unique technology cultivated over 70 years.

SATOSHI ISSE, REPRESENTATIVE DIRECTOR OF ICHINOSE CO., LTD.
SATOSHI ISSE | REPRESENTATIVE DIRECTOR OF ICHINOSE CO., LTD.

It is our view that Japanese manufacturing is currently experiencing an exciting period. We've witnessed a three-year supply chain disruption in the aftermath of the COVID-19 pandemic. Simultaneously, there's an ongoing decoupling between the United States and China. All the while, multinational companies are actively seeking to diversify their supplier base, placing a strong emphasis on reliability. Japan has maintained a reputation for decades due to its advanced technology, high-quality products, reliability, and trustworthiness. With the historically weak yen, it can be argued that this presents a unique opportunity for Japanese firms, products, and services to reaffirm their position as significant players in the international market. Do you agree with this premise? What are the advantages of Japanese firms in this current macroeconomic environment?

Japan enjoyed a strong yen for approximately 50 years, and during that period, many production sites relocated from Japan to China. In fact, there is now an area in China recognized as the world's largest production center for valves. Valve production encompasses varying levels of quality: high-quality, mid-quality, and low-quality general-purpose valves.

For low-cost general-purpose valves, shifting the supply chain away from China would pose significant challenges because the production facilities are concentrated there, primarily due to lower labor costs. This has become the industry standard. The most significant distinction between China and Japan lies in labor costs. In China's rural areas, workers can be hired for 20,000-50,000 yen per month, a substantially lower figure than the average monthly salary in Japan, which stands at 220,000 yen. This five-fold difference in labor costs significantly impacts valve production expenses, especially the low-cost general-purpose valves, giving countries like China, Taiwan, Vietnam, and Indonesia a competitive advantage.

However, various industries demand valves of varying quality levels. Our primary aim is to specialize in selling high-quality valves in the overseas market, which can only be manufactured using technology exclusive to Japan.

 

The Espero is one of the original valves that you developed as a specialized valve for use in high-temperature and high-pressure applications. Could you please share the motivation behind the development of the Espero and explain how it surpasses other conventional valves available in the market?

In the past, many trading companies in Osaka used to manufacture their own valves. However, these valves were of inferior quality and prone to leaks. This was the driving force behind our decision to develop the Espero. While the price of the Espero is relatively high, its quality surpasses that of conventional valves significantly.

During the period of rapid economic growth in Japan, we witnessed a surge in new construction projects across the country, and we supplied a considerable number of our high-quality valves for these endeavors, particularly in the petrochemical industry. However, following that period, there was a decline in new construction projects for petrochemical plants, and as a result, our customer base for that product became limited.



What is your branding strategy for promoting and boosting sales of your original high-quality products? Are you actively seeking partnerships in the overseas market to gain a better understanding of market penetration and how to enhance sales of your products?

Because our goal is to market high-quality specialized valves, our marketing efforts are highly targeted. Our branding strategy centers on showcasing our technology, reliability, and superior performance. It's essential to note that different countries have distinct market dynamics. For instance, there's a significant demand for valves in Europe, particularly in Germany, where the market size is approximately 2 trillion yen. This is four to five times larger than the Japanese market, which stands at around 500 billion yen. Currently, we don't have any immediate plans to compete in the European market.

Our initial focus is on entering the U.S. market. Recently, we took part in a valve exhibition held in Houston, Texas, USA, with the objective of identifying potential local distributors. We have identified promising candidates for local distributors and are currently in the process of reaching out to them.

 

The valves you produce are meant to operate in harsh environments, including corrosive materials, high temperatures, and extreme pressures. These conditions can lead to wear, erosion, and corrosion, potentially diminishing performance and causing valve failure. How do you ensure that your valves can effectively operate under these challenging conditions?

The primary distinguishing feature of all our products lies in the longevity of the valve's main body, which is crafted from stainless steel or iron, ensuring a lifespan of approximately 40-50 years. Even if you need to replace the seal or other internal components, the valve remains in service. While the initial cost may be higher, in the long run, you reduce operational expenses due to its extended lifespan and ease of maintenance.

In contrast, valves manufactured in China and Taiwan, while more affordable upfront, typically require replacement after just a year or two, especially under high-temperature or high-pressure conditions. We believe that the long-term usability of our valves will make them highly valued and sought-after in the overseas market.

 

Next year, your company will be celebrating its 80th anniversary. If we were to return for your 85th anniversary in six years and conduct another interview, what goals or ambitions would you like to have achieved by then? How would you like the company to be perceived in the global market at that time?

I typically avoid making long-term plans because our business environment is constantly evolving. Our goal is to expand in the overseas market. Instead of extensive long-term strategies, I prefer concentrating on what's expected to happen in the coming year or two. By doing so, we can steadily build our performance and customer satisfaction, adapting to the changing landscape as needed.

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