Taishin Koki: The trader evolving with the times

 We have had major supply chain disruptions in the last three years, caused by the COVID-19 pandemic as well as tension from the China-US decoupling situation. As a result, we are seeing many multinational groups try to diversify their supply chains with a focus on reliability. Japan is a country known for decades of high reliability, trustworthiness, customer-centric production, and advanced technology. Now, with a depreciated JPY, it is our view that there’s never been a more opportune moment for Japanese manufacturers to meet the pressing needs of this macroeconomic environment. Do you agree with this premise, and why or why not?

In a broader context, what you mentioned could hold true. However, when specifically considering Japanese SMEs, we are currently facing a challenging period as companies require increased capital to sustain their operations. Coupled with a declining population, the primary challenge companies now encounter is ensuring business continuity and succession. A noticeable trend has emerged where major companies are acquiring SMEs, suggesting that mergers and acquisitions (M&As) are playing a significant role in Japan's industrial landscape. As we look ahead, I have concerns regarding the extent to which Japanese SMEs can thrive in the international market.

You mentioned Japan’s aging population. As a small company with less than 30 employees that are very treasured, what would you say has been the biggest impact of Japan’s demographic decline on your company?

In reality, the population decline is significantly affecting us, posing considerable challenges. The scarcity of next-generation employees and the difficulty in knowledge transfer have become pressing concerns. Regrettably, we have not implemented any notable strategies to address these issues thus far.

 Is foreign recruitment something you might be considering?

Yes, we already have one Sri Lankan employee who is 26 years old and she is working in our international department.

We know that your international department was founded in 2017 as a way to narrow your focus and put a greater emphasis on your international activities. Could you tell us more about your motivation and why you chose this time to put more eggs in the international basket? What is the future direction of your international strategy?

The history of this department dates back approximately 12 years, during a period when Japanese firms were increasingly embracing localized production in China as an industrial trend. An acquaintance provided me with an opportunity to visit China and witness the situation firsthand. However, I quickly realized that establishing an office in China was beyond our capabilities, both for myself personally and for the company, due to the anticipated challenges in management. Fortunately, we had a serendipitous encounter with Alibaba, which presented us with an opportunity to conduct business overseas.

Given my lack of proficiency in English, I initially relied on Google Translate to assist me in composing emails for our forays into international markets. I began pursuing overseas business ventures in my spare time, and eventually, we secured a customer in Thailand. I personally handled the shipping of packages from Japan to Thailand and even took charge of writing the invoices. As we garnered another company as a client through our services, I soon realized that the scale of this business was far too substantial for me to manage alone.

At that time, we were fortunate to have Ms. Hashimoto here working part-time for us. Recognizing her valuable skill set, I entrusted her with overseeing our entire international business operations. To her credit, she successfully nurtured this division, enabling it to thrive.

 What would you say have been the key lessons or key takeaways that you’ve learned since conducting business overseas with overseas partners?

We started our international business completely from scratch, and inevitably there have been many issues with overseas customers. We are now luckily at the point where we have learned from previous issues and the next stage is to overcome them.

 Many firms we’ve interviewed have expressed the importance of finding local collaborative partners. Is this something that you’ve done in the past or that you’re looking to do in the future?

We currently work mainly with local traders, and in fact, 90% of our business is working with local agents. In countries like India, there have been discussions to have a one-stop shop and create a business together locally.

Looks like Asia and Southeast Asia are the focus point. Looking forward are there any other new regions or markets in which you’d like to find a local agent to work with or even to establish a physical presence in?

I would like to emphasize that the following statements represent my personal vision, which has not yet been disclosed to our employees. In fact, it has not reached the stage of being shared with them. It is important to note that the products we currently handle are challenging to ship and are classified as hazardous items. Exporting such products demands additional effort. However, diversifying our product range to encompass a wider variety could potentially position us as a bridge for Japanese SMEs venturing into overseas exporting. With this mindset, I envision the possibility of establishing collaborative businesses. This endeavor may involve locally-produced goods from Fukuyama.

In the past, traders typically handled logistics and financing, now they are expected to add value in all kinds of new ways. In your case, you have some manufacturing capability with your subsidiary, but you are also adding value through your R&D and consulting services. How do you believe traders like yourselves need to evolve to be consistent with the needs of this new age?

Undoubtedly, we must all adapt and evolve in accordance with societal changes. To ensure the survival of our company, Taishin Koki, we too must embrace this principle. As an SME, we face the challenge of limited available capital for investment. Therefore, our strategy entails implementing numerous incremental changes to effectively meet the evolving demands of the market.

When I founded Taishin Seiki 30 years ago, the primary objective was to enhance the value of our company. Alongside a product designer, we initiated this small-scale manufacturing venture. Despite our success, I do not envision expanding the company's size. Enlarging the business would impose additional burdens on our employees, and unfortunately, we find ourselves in a situation where raising wages is not a viable option. Instead, I intend to maintain the small-scale nature of our workforce and invest capital into the current wage structure. As a company, our investment focus will be on nurturing and developing our human capital, rather than pursuing manufacturing scale expansion. As we enter a new generation, I am actually contemplating retirement in the near future.

Imagine that we come back at the time of your retirement and interview you all over again. What goals or achievements would you like to see the company reach by the time we come back for that new interview?

I made the decision to retire at the age of 67. Frankly, once I have retired, my attention will no longer be focused on the company. The responsibility of determining the company's direction and further development will rest with the next generation. Meanwhile, I will be concentrating on establishing a new business venture of my own.

Could you tell us about this new business?

I have various thoughts occupying my mind currently, although none of them are of significant magnitude. My intention is to maintain a youthful spirit and continue serving the community. However, I do not wish to be recognized solely as the president of a company. Consequently, I might contemplate anti-aging treatments or even plastic surgery during my retirement, as a means to preserve a youthful appearance. From a professional standpoint, as a president, I strive to take pride in both my employees and the company, fostering a mutually beneficial relationship.