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Tenhiko Industrial: embracing tradition and innovation for 148 years of success

Interview - November 8, 2023

Tenhiko Industrial Co., Ltd. boasts a 148-year history of innovation, from its origins as a ripsaw manufacturer in 1875 to its evolution into a special steel distribution company

TAKEHIKO HIGUCHI, PRESIDENT OF TENHIKO INDUSTRIAL CO., LTD.
TAKEHIKO HIGUCHI | PRESIDENT OF TENHIKO INDUSTRIAL CO., LTD.

Japan has long been renowned for its commitment to high quality, advanced technology, customer-centric approach and unwavering reliability. With the very weak Japanese yen, it is our contention that this is a unique opportunity for Japanese firms to establish themselves as significant and reliable players in the international marketplace. Do you agree with this premise? Why or why not?

Given the current state of a very weak Japanese yen, we firmly believe this presents a unique and advantageous opportunity for Japanese firms to establish themselves as significant and reliable players in the international marketplace. We strongly endorse this premise due to the strategic measures undertaken by Japanese companies to renew the supply chain and relocate their production from China back to Japan. This strategic shift is anticipated to propel Japanese exports forward and solidify their position in the global arena.

 

The aging population in Japan presents a significant social challenge, particularly for smaller SMEs that have a workforce with an aging demographic. These businesses must navigate the delicate balance between the necessity for cost-effective labor and the realities of the country's demographic situation. How is Japan's aging population impacting your day-to-day business? As a trading firm, how can you help your clients overcome the challenge this poses for them?

To help our clients overcome this challenge, we recognize that we cannot directly address the issues related to Japan's aging population. Instead, we view this situation as an opportunity for companies to consider bringing their manufacturing operations back to Japan, leveraging the country's strengths in high quality and advanced technology. However, it is essential to remain cognizant of the ongoing population decline, which could affect the availability of skilled workers in the future.

In response to this, our trading company is focusing on expanding our operations in international markets. We have established bases overseas, in Thailand and Shanghai, to broaden our reach and diversify our business. Additionally, we are actively seeking to expand into emerging markets such as India to create more international sales channels for our clients.

Southeast Asia, including countries like Indonesia and Vietnam, has become our primary target in the quest for new opportunities. By tapping into these markets, we aim to mitigate the impact of Japan's aging population on our business and provide valuable solutions for our clients to navigate this demographic challenge.

 

Over the course of nearly 20 years, Tenhiko Industrial has successfully conducted its overseas business since its establishment in Thailand in 2005. As you look toward India or other new markets for your future expansion, what would you say have been the most significant takeaways or lessons you have learned through conducting your international business?

Tenhiko Industrial operates as a trading company while also engaging in the procurement of materials from steel manufacturers. Our primary focus lies in the cutting process, while we rely on specialized SMEs to handle crucial aspects such as heat treatment and other necessary processing services. These processed materials are then efficiently delivered to our esteemed customers. Japan's supply chain for steel production is intricate, comprising numerous entities responsible for different segments of the production and utilization of steel. This complexity results in the steel industry being divided into smaller groups, creating a barrier for external players seeking entry into the market. Despite these challenges, we are grateful for the opportunities we have found domestically, successfully securing a foothold in the market.

In 2005, recognizing the growing expansion of Japanese automotive companies in Thailand and the consequent demand for specialized steel, we made a strategic move by establishing our base and processing factory in the country. Our aim was to replicate the successful supply chain model we had in Japan. However, during this process, we encountered a significant challenge.

Unlike in Japan, we found the difficulty of finding  a local SMEs in Thailand equipped with the specialized technologies required to handle the processes we had been outsourcing to companies back in Japan. As a result, it became apparent that in order to meet the demands of our customers effectively, either the end-users or our own company had to invest in the necessary processing machinery.

In response to our valued customers' requests, we strategically decided to bolster our processing facility in Thailand. Through this initiative, we were able to equip ourselves with an extensive range of machinery, surpassing even the capabilities we had in Japan. This strategic enhancement enabled us to offer comprehensive and top-notch processing services tailored to the specific needs of our clientele.

The uniqueness of the Thai market lies in its streamlined supply chain, where there are relatively fewer entities involved between us and the major end users. This direct connection allows us to gain valuable insights into our customers' needs and production trends. By understanding their requirements in advance, including the specific machinery and quantities required, we are better equipped to plan and optimize our processing and delivery operations.

The knowledge and expertise we have accumulated in our Thailand facility play a crucial role in our operations, as it serves as a strong foundation for our continued success in the industry. In parallel, we are aware of the challenges that Japan's aging population presents, particularly concerning the succession of current SMEs. The potential discontinuation of businesses due to a lack of successors could impact the overall supply chain and availability of specialized technologies.

To mitigate such risks and ensure our sustained growth, we remain committed to investing in and advancing our own processing technologies. This proactive approach allows us to be well-prepared to replace or integrate the technologies of other SMEs should the need arise. Consequently, we can maintain our position as a reliable and comprehensive provider of processing technologies for our valued customers.

Since our inception in 1875, we have dedicated ourselves to being a specialized saw manufacturing and sales company for a period of 70 years. Following the war, we strategically shifted our focus to become a trader, specializing in special steel materials and offering cutting services. Drawing from our extensive experience in the industry, we have successfully identified prospects to extend our services beyond cutting. This strategic move enables us to cater to a broader spectrum of customer needs and preferences. As a result, we now offer an array of comprehensive processing solutions, enhancing our value proposition in the market. An integral aspect that has significantly contributed to our success is our long-standing experience in exports, which dates back to the  Taisho  Era. This wealth of exported know-how has proven to be a pivotal asset in navigating the complexities of the global marketplace and remains instrumental in our growth and success today.



Are you looking to unlock new applications or markets in Thailand or Southeast Asia? Moreover, are you interested in broadening your clientele beyond Japanese manufacturers through strategic overseas operations?

The automotive sector's allure drew us to Thailand, prompting the decision to establish a  company in this promising market. Initially, we embarked on this venture without a particular company in mind, but we began collaborating with  Japanese companies. Over time, our client portfolio has diversified, resulting in a balanced distribution between local Thai enterprises and reputable  Japanese  companies. Beyond the automotive domain, our valued clients encompass the motorcycle, industrial machinery and  electrical equipment components & parts industries, further showcasing the breadth of our expertise and market reach.

Are there any emerging markets your company is currently prioritizing or exploring that may present exciting applications for the products you trade?

In Japan, the automobile industry is the main leader of the use of special steel. Because we have been selling materials for saw blade applications for many years,  and this strength sets us apart in the market. With an eye toward Southeast Asia, we aim to capitalize on our exceptional product development capabilities for blade applications to unlock new opportunities in that region.

 

As your company considers India as a potential new market, could you please elaborate on your strategy to ensure the delivery of the same level of quality and processing service to prospective clients in the region? Are you planning to establish processing facilities similar to those in Thailand, or will you be pursuing partnerships with local companies akin to your approach in Japan?

Regarding the present situation,  we are not currently considering plans to expand into India.

Nevertheless, we are focusing on the Southeast Asian market and have successfully conducted business in Indonesia through a partnership model with a local company. As an SME, engaging in partnerships with local entities proves to be a more effective business operation strategy. 

 

As an SME, establishing robust connections and cultivating relationships with local companies and individuals holds significant importance when it comes to gaining traction in new markets. Could you elaborate on the pivotal role these collaborations play in your business development? Additionally, could you share a pertinent story or example of a past collaboration that exemplifies your proactive approach in this regard?

We have significantly enhanced the capabilities of our processing facilities in Thailand through our partnership with a prominent Japanese Forming Roll manufacturer with a significant presence in Southeast Asia and China. Our collaboration involves a sustainable approach, as the used Forming Roll undergoes a meticulous maintenance process, allowing for its reuse. We have been entrusted by the Japanese company to manage the maintenance process on their behalf. Given the Japanese company's considerable foothold in Indonesia, they approached us to establish a new processing facility in the region. Though this task posed challenges for an SME like us, we actively sought a local partner. By providing technological assistance and comprehensive training, we equipped the local company to carry out the maintenance work both for our operations and the molding company, thus fostering a mutually beneficial partnership.

Another remarkable instance involves our local customer in Thailand, specializing in utilizing special steel for motorcycle part production and handling afterparts. Aspired to establish business ties with a Japanese motorcycle company, the Thai company encountered significant challenges connecting with Japanese corporations. Recognizing the potential for synergy, one of our Japanese staff members based in Thailand facilitated an introduction between the local company and the Japanese motorcycle manufacturer. A fruitful and enduring business relationship has flourished from this strategic introduction. In this capacity, our company effectively acted as a bridge, bridging the gap between the two entities and fostering a successful and mutually beneficial partnership that has continued to thrive over time.

 

The automotive industry is changing drastically with the switch and adoption of EVs and hybrid vehicles. With this switch taking place, there is a huge push to adopt newer materials that are lighter. Traditional ferrous materials are not good enough, and new materials like aluminum, magnesium, titanium and resins like CFRP are being widely adopted to offset battery weights. In the case of your business, can you explain to us some of the new materials you are currently trying to offer for the automotive industry or other industries that are looking to progress with these lighter and more economical steels?

While we acknowledge the evolving landscape in various industries, it has become evident that conventional carbon steel is no longer the prevailing trend or universally applicable. As a proactive response, we are keen on venturing into non-ferrous metals, such as titanium, for applications beyond the automotive sector. With the supply chain experiencing substantial and transformative shifts, exemplified by the rapid growth of the EV industry, we recognize the emergence of fresh opportunities for our business to explore new markets within this evolving supply chain landscape.

A significant advantage we possess is our extensive 148-year history, which has fostered a strong foundation of trust and reliability within the market. Our longstanding engagement in international trade further bolsters our position. As we look ahead, we remain committed to expanding our presence in Japan, leveraging our reputable history to propel our growth and cement our standing in the market.

 

How do you envision the upcoming major milestone or transformative change in the evolution of your company?

In our pursuit of growth and exploration of new ventures, we are dedicated to identifying and cultivating trustworthy partnerships that can lead to synergistic opportunities. It is important to clarify that our intention is not to acquire other companies but rather to collaborate with steel processors and other diverse businesses, fostering mutual growth and expansion.

Internally, our management and  managers convene to chart the company's trajectory for the next 10 to 20 years. Our focus extends beyond mere business expansion; we are equally committed to enhancing the individual capabilities of our employees and nurturing job satisfaction through effective communication and engagement with external partners. To promote information exchange and broaden our network, we jointly holding study sessions with  our customers  and engage in employee exchanges.

These collaborative endeavors are not only beneficial for our company's advancement but also play a significant role in motivating our employees.

At the core of our company's foundation lie our philosophy, mission, midterm plan and overarching targets, all of which come to fruition through the dedicated efforts of our employees. Guided by our resolute credo, 'employee - first principle' we recognize that a motivated and engaged workforce is crucial in propelling the company toward success.

In January of this year, we undertook a significant move, relocating our company to a new setting. Embracing a forward-looking approach, the younger generations within our workforce took charge of designing the  new office layout. This sense of ownership instilled a deep sense of responsibility in them, as they strived to create a comfortable and conducive working environment for their present and future endeavors.

 

If we were to conduct a follow-up interview on the final day of your presidency, what achievements for the company would you be most proud of? What lasting impression would you like to leave in the minds of others when they reflect on your Presidency?

As I deliver my final speech to our valued employees on my last day, what fuels my determination is envisioning the contentment and joy radiating from their faces while working for our company and knowing they are supporting their families through their dedicated efforts. The happiness and smiles of our employees constitute the core mission that drives me during my presidency, and I am resolute in achieving this vision.

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