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Tsukasa Chemical Industry: providing high-quality packaging with a focus on the customer

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Interview - April 15, 2021

Since its establishment in 1968, Tsukasa Chemical Industry has been a leader in the production of high-performance packaging machines and a range of plastic products for several industries. Having gained a strong position on the domestic market over the years, the company now has an eye on global expansion. We speak with president Takeshi Nishimura to learn more about the company’s products and plans for the future.

MR. TAKESHI NISHIMURA, CEO OF TSUKASA CHEMICAL INDUSTRY CO., LTD
MR. TAKESHI NISHIMURA | CEO OF TSUKASA CHEMICAL INDUSTRY CO., LTD

Competitors such as China, South Korea and Taiwan can provide lower quality products at cheaper prices enabling them to become market leaders. However, when it comes to highly niche fields, Japan is still holding the number one position thanks to monozukuri. Could you please tell us in your point of view what is the essence of the Japanese monozukuri and how is Japan able to be competitive when it comes to niche fields?

First of all, we are not considered one of the highly technologically advanced companies, as we don’t invent things like iPhones for example, which is highly technical. So, we may be vulnerable in a way that other companies or countries can easily copy the same or similar technology or process that we have here but otherwise, we have to maintain our position by expanding to other markets and getting our name out with branding and positioning ourselves in the market beyond that.

The obvious question you might have is, how to survive through these harsh times with the ease of rival companies copying technologies and products that are specific our market.  We might say that we are lucky in a way because the production of plastic packaging itself in Japan is done in quite a specific way because of Japanese taste towards perfect packaging and its specific distribution channels, therefore this makes it very hard to be replicated. For this reason, where are able to get through these hard times, and sustain our business.

 

Japanese products are well-known for their high quality. How do you ensure the quality remains the same whether the products are being produced in Japan or overseas?

It is true that Japanese products are widely considered to be of high quality. However, it's very hard to implement the same technological principles as we have here in Japan to the other countries. For that reason, we applied the same technological knowledge and procedures to build up the same production quality in other countries, such as Malaysia and Vietnam.

For example, we have the number one market share in stretch films in Japan, that occupies about 35% in a market. This has an effect on the claim ratio.

The overseas market products tend to have more claims rather than domestic ones. But our ratio producing in Malaysia and Vietnam is approximately 100 ppm (0.01%) which is very low because of applying our standards of high quality to our goods as I mentioned before.

Still, quality matters, and we try to apply our best practices to comply with the highest quality standards. We keep trying to reach the ultimate goal of reaching 10,000 products with no claims, whether it is domestically or overseas.

 

Of course, you mentioned that one of the main products is the stretch film. When we interviewed the president of New Long, which is also involved in a specific field such as yours, he mentioned that this industry is expected to grow in the upcoming years, especially in regions such as Asia Pacific, but also places such as China, North America and Europe. How are you planning to take advantage of this growth?

Our main market is Japan, and that market has been stagnating for many years, so it is quite difficult to continue to see growth domestically. Therefore, we are marketing our products in Asia to be competitive and simultaneously applying “Japanese high quality” to them. Because quality does matter for SME companies like us. The cost is one factor, but most Japanese companies are focusing their best practices and implementing them into quality production.

It is not directly related, when I was in Europe, I observed the situation whereby local companies gave preference to other local companies. Firstly, by discounts which made people pay attention more readily but also the buyers focused less on quality and would accept some defects. But we don’t want to cross that line. We want to constantly emphasize high quality to sustain our position in the market.

 

Could you please give us an overview of your best-selling products overseas?

As for our company, we only have a good market share in Japan with our flagship products being the PP strapping and the Tying Tape, this is because of strong brand recognition and a loyal customer base.

For many reasons, the same can’t be said of our presence in overseas markets. The main one is the shipping cost involved in transporting products to Europe and beyond. But our baler twine has potential in the global market, which is still only 1% yet though.

 

So, what strategies do you have for your company to expand internationally?

We have to walk a different path from what the other companies are doing, for example that company from Europe, our number one competitor already has an overwhelming market share so we must make inroads by focusing on the superb quality standards that we represent being a Japanese company, first and foremost. Also, to be a long-lasting company in this industry, can come to fruition by producing great quality products as a result of a superior production process.

For the future we would like to get into new markets in countries where we don’t yet have a presence. It’s just a question of finding the best fit between the quality of our products and the market in question.

 

Japanese companies are shifting overseas to find partners in terms of co-creation. It is apparent they make high-quality products but are sometimes unable to market their products overseas, so they are intent on finding partners. Have you found any attractive opportunities for co-creation for your company?

It began when we were looking for an overseas partner to produce our major product, PP strapping and luckily we met a good partner, Mr. P.J. Lim of Scientex Berhed, and we started joint venture company in Malaysia in 1998 and another joint venture company in Vietnam from 2008 with them. After 20 years, we can say we have had a good relationship with our partner company.

 

Could you describe the features of the Tsukasa packaging system and the competitive advantages it has?

We consider the system to consist of M + M that is, machine and materials.

Over 50 years, we have developed the M + M model, born from our respective in-house knowledge. That product is the air cushion machine, for example. We have been developing air cushion machines and its film. We are now introducing “Cushion Hatty 4.x” as a new product for the domestic market. 

Furthermore, maintenance is another important issue. Presently, we have a good existing distribution network and after-service channels in Japan that are tailor-made only for the domestic market; this channel is our strong advantage.

 

Companies are pursuing a more eco-friendly business approach. How is Tsukasa’s commitment to the environment and sustainability?

By volume 5000 tons of different kinds of plastic, have been utilized by the company in order to make our specific products. Obviously, there are a lot of byproducts that can have a polluting effect on the environment so customers are concerned about this and ask us what can be done about it, so we adopt the three R’s – Reuse, Reduce and Recycle. These three practices are widely used in this plastic manufacturing industry right now. For example, in the production of stretch film we already have a successful decrease of material being used by decreasing the thickness of the layer from 12 microns to 8 microns without losing its key features. The company is steadfast in its pursuit of reducing the amount of plastic waste associated with its products.

 

How have you been able to maintain profitability during the pandemic and looking to the future, what is your midterm strategy to reach the ¥20 billion revenue in what you are aiming for and what role will international expansion play in it?

The closed nature of the market itself, which prevents Japanese companies expanding overseas or foreign companies entering the Japanese market is advantageous to us in the respect that we can expand our business domestically.

We maintained good results through the pandemic because of our managerial philosophy of always standing by the customer through thick and thin. Because of this, we now have 35 salespeople, both men and women, working almost as a family unit, and this closeness improves reliability and customer relations. We use TV conferencing, not just business calls, between our staff – who have to work from home during these times – and customers, and this too improves customer satisfaction and interpersonal business relations.

As for the medium-term strategy plan, there is the goal of ¥20 billion revenue but that isn’t a strict target from the CEO, it’s more an example of what we consider attainable, including 5% oversea sales target we are aiming for. Although we can’t be considered a global company, we are happy to attract interest and we will continue to apply the same high standards in our customer relationships that we have nurtured and maintained over many years.

 

Over the next few years, what are your dreams for the company?

A major priority is the welfare and happiness of our employees. We want to maintain a healthy and happy work environment, as this is good not only for the workers themselves but also helps our performance. There’s no point just hitting targets if the employees are not happy since work is such a big part of our lives. Having worked in the packaging industry for more than 40 years, I know virtually all the companies, CEOs and clients and have maintained good relations with them, so I’d like that to continue in future years.

There may be other companies in this sector that appear to have a more aggressive expansion plan overseas, for example, setting up packaging production plants in China or the US, but these efforts are often affected by the prevailing economic conditions in the locality which can result in fluctuating fortunes, including the closure of plants and laying-off of employees.

We prefer to grow in a steadier, more sustainable way. After I became president of the company, it’s equity ratio improved greatly, meaning that, the company operates on its own premises.

Now obviously the company is not listed. If the company was listed it would be conducting best practice towards satisfying the needs of the stakeholders, but since it is not listed, we try to do our best satisfying the needs of our customers and our employees. I learned from my early experience working in Europe that a healthy work-life balance is important not just in terms of self fulfilment and happiness in life, but it also promotes better quality of work and consequently better business outcomes. Strapping is my life; “stand by the customer” and “work for FUN” is my policy.

I will keep contributing to the packaging business with this spirit.

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