Since their foundation in 1896, Teibow continues to value employees and grow with the needs of the times.
Over the last few decades, we have seen Japanese manufacturers facing tough price competition from regional makers located in countries with lower costs of production. Nevertheless, we find that Japanese firms have remained leaders when it comes to certain niche B2B technologies, serving international clients on an OEM or ODM basis. How are companies such as yours able to remain competitive despite price competition from neighboring manufacturers?
I believe the greatest strength of Japanese companies is their ability to provide excellent technology and services. These two factors are what really distinguish them and give them a competitive edge, no matter how challenging the times. Part of that is definitely their ability to continue making improvements and innovations in technology, and their thorough approach to customer service, providing tailored support to the needs of their clients and always thinking about their clients.
When it comes to quality, they continually enhance their ability to produce top-notch quality products. Therefore, they can do a lot on a very stable basis, with the ability to ensure quality even with large production lots. For example, when it comes to our pen nibs, we create customized nibs to meet the needs of our clients and do so on a diverse scale. I think that is our strength and the strength of Japanese companies.
Today, Japan is the oldest country in the world, and it also has a negative demographic trend. This is creating challenges for firms in terms of recruitment, it's also creating a sales challenge for Japanese firms because fewer people mean a smaller domestic market. How is your company reacting to these two big trends caused by Japan's shrinking population?
Regarding our response to the shrinking market here in Japan, when it comes to our markers, domestic sales represent 20%, and foreign sales represent 80%. We are shifting our sales focus from shrinking demographic areas such as Japan and Europe to growing and booming areas such as India, Southeast Asia, Latin America, and China.
With regards to the decline in the labor force, we are incorporating more automation into our design and digitizing our processes to increase work efficiency and offset the pressure placed on our workers. Additionally, we are creating an environment that is welcoming and embracing of those who are well into their mid-60s or 70s so that they can continue to work, and we're supporting that kind of continuity.
Lastly, we are putting more focus on enhancing the recruitment of foreign staff for our company, enabling them to be active not just in a single field, but in all areas of the company from sales to engineering and manufacturing as well.
You mentioned before that one of the big strengths of your company, and Japan, was the ability to manufacture large lots with uniform quality. Your company opened a base in China in 2012. I'd like to know how you are able to maintain that quality, whether your products are manufactured in China or Japan?
Regarding how we maintain high levels of quality even in our factories in China, we manufacture our writing instruments and the tips used in eyeliner as cosmetics there. For those elements, the shaft portion of the product is a crucial component that contains the ink that needs to be of high quality, so we have that manufactured in Japan. However, the grinding and polishing of the heads and tails are done in China, so we're able to maintain high quality.
Also, when it comes to our grinding and processing technologies, we're able to maintain high levels of quality assurance by ensuring that we outsource the craftsmen who are very technically talented in those areas, specialized in those areas, and have them be the ones who are dispatched from Japan to the Chinese manufacturing facilities to supervise the quality of the products that are manufactured there.
During Covid-19, we saw that there were many disruptions, such as a shortage of semiconductor chips and logistic problems caused by China's zero covid policy, among others. As a result, we're seeing that companies are trying to shorten their supply chains and many people argue that manufacturing will come back to Japan within the upcoming 5 to 10 years. Do you believe that we're going to see a revamp of Made in Japan?
I do believe that, on the whole, that is absolutely what is happening. In a certain aspect, when it comes to the business in China, they will continue to do their business without needing to necessarily shift their styles, but when it comes to cosmetics, eyeliners, and other products that are not supplied to China and other industries, we definitely see that they're looking to reduce their reliance on Chinese supply and shift their OEM and ODM to other countries.
Even one of our clients in the US that used to use Chinese OEM has shifted to one in Vietnam, for example, so we're definitely seeing a more diverse supply chain being established, with efforts to diversify it on many levels.
Even when it comes to our own supply chain, regarding the procurement of raw materials, where we used to rely on materials from China, with Covid-19, it became more difficult to import and procure those materials, so we've also gone down the same line of finding ways to procure our raw materials from countries other than China.
From the perspective of Sustainable Development Goals, we're looking to really create a more sustainable supply chain on a corporate level. We do have an example of a company that deals with fibers and threads where a lot of that was reliant on China, but with the pandemic, it dropped by 90% or so. They're looking to restructure the ways in which they manufacture to be able to manufacture a lot more in-house or domestically. I'm not able to disclose the company name.
Your firm started in 1896 manufacturing felt hats. Then, in the 1950s, you moved into nibs, as well as helmets. Through time, you became a global leader in the production of pen nibs, and you then added the cosmetics field and, more recently, metal injection molding. Could you run us through this very unique history, and the rationale behind this evolution in product development?
So actually, we started with the creation of these felt hats or gentlemen's top hats and hats made out of felt. That was the start, and we did that for 60 years, but slowly, as things shifted in Japan after the Tokyo Olympics, the market began to shrink, and we started to shift our market.
At that time, there was a famous stationary company called Uchida Yoko, that was looking to expand into the US market, and they approached us, asking if we could manufacture pen nibs for their markers that they wanted to export to the US. That inspired us and led us to enter into the field of felt pens.
From there, we began to expand within the pen nib world through our technology. Initially, we were making wide felt pen nibs, but as demand increased for thinner nibs, we expanded from felt to synthetic fiber, and then plastic pen nibs. We were able to accumulate a broad spectrum of technologies to showcase and expand our nib development capabilities.
We’ve noticed an increasing demand and popularity for ballpoint pen nibs, but we cannot keep up with the quality and cost that Bic, Pilot and Mitsubishi Pencil develop. We gave up ballpoint pen nib development halfway through.
Instead, we looked into areas where we could venture beyond ballpoint pens, such as metal nibs. We began to produce such nibs and innovated by creating a metal nib with a unique striation that filtered ink in a useful way.
The writing feel was something we continued to refine, but one issue was that although it could last a long time, for around 3000 meters, if the paper gets tangled up, unlike a ballpoint pen, which rolls off the paper, it will not be possible to write even 50 meters.
To find a different solution, we ventured into the MIM world, or metal injection molding. This allowed us to refine our technologies and discover a whole new market beyond pen nibs, creating precise components such as wristwatch parts.
There was also an application for old-school flip phones that had a hinge. The MIM was utilized in the making of those hinges for those cellular phones that became very popular during the Galapagos syndrome of Japan. They were very tiny and compact. They were all different in style. They were as varied as your teeth.
Additionally, our metal injection molding technology has received high appraisal because it enables precise and miniature level manufacturing. If you were to use regular technologies, it would be extremely expensive. However, MIM enables you to make an initial investment that may be quite high, but when it comes to manufacturing on lots of 1000 or more, it becomes very affordable. That is one of the reasons why MIM is trending.
Could you please tell me what advantages your MIM technologies offer in comparison to other alternatives?
What distinguishes us from others is, first of all, that we're able to work with titanium. Other companies cannot. Another thing is that through our MIM technology, we're able to create products with a vacuum or an empty hollow space. One example is a product we've created with a hole in the middle, and we can manufacture parts with hollow spaces using our technology.
This ability to create hollow spaces through our MIM manufacturing process is a huge advantage. In the past, manufacturers would attach two portions together to create a hollow space in between, but this often led to quality issues. Our technology resolves this issue and provides better quality and movement for whatever needs to pass through that space. That is a strong point of ours.
You also have unique technology in brush control that has allowed you to enter new fields such as cosmetics. You're expanding into the medical field with certain prevention products. Looking at the future, which industries and applications have the most growth potential for your company, and will you be looking to expand into them?
One aspect is definitely that we want to expand in MIM, where there is still a lot of potential. We need to compete in our existing markets, but also when it comes to metal processing companies and the moldng and grinding processes they use, they can benefit a lot by incorporating MIM, so we’re looking to see how we can promote such MIM technology to such metal working industries apart from automotive and electrical component manufacturers. There are still many areas where MIM can be a good fit.
Overseas, the size of the market could be twenty times larger than here, domestically, so we’re looking to expand MIM into overseas makers in the automotive, camera and electronics fields, and we’re looking to double our business from 2,200 million JPY within the next five to 10 years.
Our technology has been rolled out in writing instruments, cosmetics, and new fields such as diffusers and stylus pens. We're also looking to apply our liquid suction technology to medical and agricultural areas, where there's lots of opportunities for applications.
We're not only looking to expand in our core business fields of cosmetics and writing instruments, but also in emerging areas such as hobbies involving coloring. In developing countries, there's also sizable growth potential to expand our sales of writing instruments in all fields.
When it comes to cosmetics, we use strategies to leverage our relationship with world-leading cosmetic brands. We want to continue to work on promoting these brands in order to expand there. And also, there's the PBT brushes that are an increasing trend, so we're looking to see how we can expand that as a new field.
I think one thing that has been of great benefit to us is that 10 to 15 years ago, we had this feeling that the future of the writing pen was uncertain. With the huge trend of digitalization, we had this fear that the market would just continue to be on a downward slope, and that sense made us expand at that time and think of how we could go into new fields and find new applications.
That's when we were able to create a fortuitous relationship with a major Japanese pen tablet maker that enabled us to enter into the world of digital pens and provide our pen nibs for their writing feel, which was highly appraised. Even though the ink doesn't necessarily come out of it, we were still able to utilize our technology and expertise to expand there.
Furthermore, we were able to foresee the need to venture into new markets. We thought about how to enter into cosmetics, and now we have entered new fields like aroma diffusers, utilizing our ability to manage and control the suction of liquids, and then going into metal processing, and those businesses, through our MIM.
Do you think pens are going to completely disappear, or are they going to become a symbol of beautifully crafted products? What do you think the pen market will look like in 20-30 years?
Well, 30 years ago, there was this big feeling of what would happen to the future of the culture of writing. Would people stop writing at all? Would the culture of handwriting disappear altogether? What we've seen is that even today, the market for writing and the culture of writing continues to grow at 3 to 4% per year.
I can say that the culture of writing in human civilization will not disappear altogether. However, it might change, but this is something that I believe in terms of the understanding that to write, even if ink is not emitted, there's still an aspect of writing that will be integral.
The important thing is the writing feel. That is something that will continue to be prioritized, to be sought after. The ease and comfort with which one writes. I think that is something that will continue to be maintained as a high social value.
I believe that the culture of writing is something that will continue to be maintained even in the future. Take the example of another company that is continuing to promote the culture of Japanese calligraphy. It's much less than before, but they're continuing to promote Japanese calligraphy by promoting their brushes, and they aim to support the use of that.
That is an example of how it may be less than before, but it's not completely gone, so I think that shows that there's still a future for writing. It’s nicer to receive a handwritten letter than a printed one.
You mentioned before that one of your big goals for MIM was to take the technology global, to metal part processors. Could you tell us more about your international strategy, specifically which markets or regions you aim to expand or strengthen your sales in?
When it comes to the MIM business, we have very few overseas and only rolled it out in Japan. Therefore, we are looking to expand it to Europe and the US and promote it to companies where there is a potential to shift their manufacturing processes to incorporate MIM, as well as those that may have a use for our specialized MIM of creating hollow vacuums.
Apart from the MIM technology, we are also looking to expand our pen nibs and cosmetics globally, targeting areas and markets with foreseeable growth in population and GDP, such as China and India. In China, we want to maintain our strong foothold where we already have a presence, and in India, we are looking to expand by quickly developing a new sales strategy.
The last few years have shown that India has promising growth potential, beyond 70%, and there are more investments being made into education and diversifying the supply chain to be less reliant on China and more on India, making it an attractive market for us.
We are also looking to continue expanding our network of partnerships and clients in countries where we still haven't penetrated. For instance, we are looking at the African region to create openings beyond Egypt and in certain northern countries. We are also exploring ways to expand in Asia, specifically in countries such as Laos and Cambodia, where we haven't been able to cultivate relationships, so there is still potential for us in Asia.
What would you like to have achieved for the company in the next five years?
In five years' time, I would like to double our sales. We also want to increase our brand recognition and become more widely recognized. We aim to achieve this by increasing the salary of our workers and improving the work environment for them so that our employees can feel proud and happy to work for our company.
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