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Innovation & quality to make Nicca Asia’s nº1 in textile chemicals

Interview - September 14, 2016

Along with finding success in eight countries outside Japan, a shift from textile chemicals toward automotive fabrics has enabled resilient Nicca Chemical to make a name for itself in the US too. President Yasumasa Emori explains where the company is heading next and what’s behind the past decade of impressive results it has posted.

 

YASUMASA EMORI, PRESIDENT OF NICCA CHEMICAL CO., LTD.
YASUMASA EMORI | PRESIDENT OF NICCA CHEMICAL CO., LTD.

This year Nicca Chemical is celebrating its 75th anniversary with aggressive investment and impressive business growth: from 2006 to 2015 business has grown over 40%. What have been the main drivers behind this extraordinary growth?

We have had a lot of things happening in the last 10 years. We were severely impacted by the Lehman Brothers shock. At that time we had subsidiaries in seven different countries, mainly in Asia, but also in the United States. All of the sales fell 30% or 40%, something we have never experienced before. At the time, nobody knew what to do about this economic crisis; nobody knew how long the crisis would last for, or how bad the situation would become. However, at the time when my grandfather established this company, he had much more severe problems, such as earthquakes or the passing of relatives. Also, due to the Korean War, we had a big impact with regard to our company's sustainability, which almost caused Nikka to go bankrupt in 1951. My grandfather had to fire half of the employees. Most of them were relatives or friends. You can imagine how hard it was to him to fire people who were closely related to him. After this traumatic experience, he decided to establish the big family philosophy to avoid going through this tragedy again.

When we had to face the global financial crisis caused by the bankruptcy of Lehman Brothers, we talked everyday about how to overcome it. I made some public remarks in front of all the company’s staff. We lowered our costs. The first thing we did was to cut my salary and the bonuses. I requested my employees to think about ideas on how cut costs to survive to the crisis. We had tons of ideas that we gathered from them. Our management cost went down, and our profitability went going up. The spirit and teamwork that is present in the company is one of the key aspects to our success and employees’ satisfaction. We have entire families working for Nicca. Our second most recent crisis was the earthquake five years ago. We had just built the Kashima plant five months ago. We suffered several damages during the earthquake, so we had to shut down. However, we were able to recover in just one month, which is the fastest recovery in the Kashima area.

Going back to the main topic, why we have grown so much, it is partly thanks to the policies of Prime Minister Abe, whom I thank very much. We were facing several problems: a strong yen, corporate tax problems, oil prices going up… Since the Abe administration started, these problems have been decreased. The yen value is very favorable for us. Of course the depreciation of the yen was a part of the reason, nevertheless it is our members’ efforts with our big family policy that made remarkable progress – the cosmetics division has grown 150% and our chemical products sales have grown 30%. We have been focusing on creating a strategy for our chemical division, more directed towards textile chemicals. We aim to be the number one textile chemical company in Asia.

 

Nicca launched Demi Cosmetics in 1982 based on the know-how of interface science and the technology of washing, lubrication, and dyeing cultivated in the textile field. What are the main characteristics that differentiate Demi cosmetics products from those of your competitors?

We are a technology-related company. The founder said that we do not sell the product, but we are selling the solutions and the technologies. This philosophy is nothing but our strategy. We have a technology to gently dye silk and another to wash wool, which contain synthetic fibers as well. We have to be careful about how the materials feel, so they are not itchy or hurt the person wearing it. We have had these technologies since the foundation of Demi, which makes our product strength very obvious to other companies regarding haircare products.

 

Beyond cosmetics, your main products are surfactants. You are one of top suppliers of Japan, especially regarding innovative textile chemicals, chemicals for metals, papermaking, cleaning… What are the most exciting new products you are working on now and that you would like to share with us?

We have a focus on working with fluorine-free water repellants. Usually fluorine-based water repellants are widely used; however, some environmental organizations are saying the fluorine-based products are not environmentally friendly. All the big names like Puma, Adidas and Uniqlo have followed this opinion and decided not to use it. We have developed a non-fluorinated product for water repelling. 80% of the product is made from plants and plant-related material, however, it has the best performance in the world. This high-spec product has attracted the attention at ISPO, which is the biggest exhibition of outdoor, sports apparel and goods in the world.

 

Nicca Chemical really is a great embodiment of innovation, especially with your new Nicca Innovation Center. In a recent interview published on The Worldfolio, you compared it to a bazaar where 40 very young, selected employees get together and discuss how to change their work style to make it more innovative, for instance. What are the first results that you’re expecting from this Nicca Innovation Center?

I feel that with this new center the motivation of our researchers has been going up; this is our first result. Also our customers seem more enthusiastic about our company after this announcement. Since the center is still under construction and we have not had any specific results yet, we expect that after completion, the visits of various researchers, regardless of their industry and backgrounds, will help to create a good environment and culture of innovation. This is one of the greatest results I expect of Nicca Innovation Center.

 

Incorporating CSR efforts has become a social norm. Society often associates chemical manufacturers to be exploiters of the environment; however, we have been reading about Nicca Chemical’s efforts to minimize your environmental impact by your environmental committees’ organization for instance. What other measures does Nicca Chemical take to ensure minimal environmental impact?

Our innovation center is also a proof of our environmental concerns and a symbol of our commitment: the water being used there is groundwater. We also have natural lighting throughout the building and we have a green roof. When creating our products, we make an effort to use plant-based materials rather than petroleum-based materials that are usually used.

We have also determined our environment impact, for instance, by measuring the amount of water being used to create products. We have our own internal standards that we consider to be environmentally net positive. For example, to be able to dye one kilogram of textile material, it takes about 100 kilograms of water. We have been able to reduce that by 50%, and we are working to reduce it further to 70%.

Starting in 1968 in Taiwan, Nicca Chemical has expanded into eight countries now. Your goal is to be the number one in textile chemicals in Asia, but not in terms of quantity but quality. You want to be the “first call” company of the clients. What markets outside Japan are you currently experiencing the most growth in?

It is very difficult to become the number one in quantity because for textile and dye, our demand includes textiles for low-income customers. The materials they demand do not need to be completely organic. This is why we are focused on customers that require the highest quality and are able to see the benefits of organic clothing, to be the number one in terms of the quality. The textile market is a growing market in the world, and more than 80% of textiles are produced in Asia. This is why we are focused on Asian markets. In the Asian market, 80% of that is produced in China. This could change due to the problems that China faces, such as environmental problems.

Recently the fastest growing country is Vietnam, which is a member country of the TPP agreement with high quality labor. The sewing process may be shifted to Cambodia or Myanmar, but we expect Vietnam to continue to grow as it has readily available infrastructure for the dyeing process.

 

The US is still in the number one economy and for Nicca Chemical it remains as an important market. In 1988 Nicca USA, Inc., including the factory, was established in the US. What is your strategy to tailor your services to the specific needs of the US market?

When we entered the US market, we were extremely confident in textile chemicals as we were the number one in Japan. Technologically, we were also the number one in Asia. However, the Asian market and the American market are completely different. Americans want to buy things made in the US, and we were too new to this market. It is very difficult to penetrate the American market as a Japanese company. For more than 10 years, we faced red figures. Most of our board members wanted to close Nicca in the US.

However, after we visited our customers one by one and listened to their needs with all sincerity, Americans have started to use our products. Thanks to our shift from textile chemicals towards automotive fabrics, we have been able to make profits in the US for the first time. We are selling several of our products to American car manufacturers that required our technology after seeing how well it worked with some big-name Japanese automotive manufacturers, to which we are selling our products. At this time, more than 60% of our US sales are going to the automotive industry.

 

To what extent are you considering M&A with US companies in your expansion strategies?

I do not have any clear vision of merging with a US company at this moment, but we are still seeking a company which can add something to our strength, or that can use our technology to get more customers. We merged with a chemical company last year that is good at cutting service silicone, metal, semiconductors, etc., and they are the number one in the market to cut silicone products.

 

You have been Executive President and Representative Director of Nicca Chemical Co. Ltd. since June 2001. After 15 years as President of Nicca Chemical, what do you consider have been the main accomplishments of your presidency?

There are two things: one is the big growth that we have experienced in cosmetics. The second thing is our world-class globalization. As a result, we have been listed on the Tokyo Stock Exchange last year. This is just a result from our company's long path, not just my accomplishment, but our company’s accomplishment. There is no accomplishment by myself. We have been able to go through the crisis as a team. Strengthening our teamwork is another of my best accomplishments, not only in Japan, but all over the world. In this part, I am very confident, also in our future, as we have built a strong basement. Our focus is to have textiles go international. I cannot announce it yet, but we have formed new partnerships as well.

 

As a final message, what would you like to share?

We are a company based in a small prefecture in Japan, but our mission has always been to create interesting and innovative products. Now we are expanding to take these products to international markets. We are a very unique and innovative company, which is based in Fukui, a rural area. However, now we have become a real globalized and diversified company.

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