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What is the version of NIKKOL GROUP monozukuri? What are your company’s strengths and competitive advantages that allow you to compete in the international market?
Ours monozukuri is a reflection of our company values and is seen through our products. We are a B2B niche company. Our ingredients are used by other companies to be later supplied to end users to meet their needs. Through our monozukuri, we contribute to society by relieving pain, creating more comfortable lives and bringing happiness to people. Our personal care ingredients are absorbed directly through the skin, so we are very careful about the quality and safety of our products. We also need to make sure we maintain a steady supply. Our chemical production factories are very careful about the implementation of 5S (5S is in the following five elements starting with S: seiri, seiton, seisou, seiketsu and shitsuke, which in English means organize, arrange, clean, clean and discipline) and have clean work environment. There are many chemical compounds produced around the world, but ours have gone through rigorous testing before being approved.
Can you give us an overview of the structure of the NIKKOL GROUP and the role of the different companies that make up the group?
NIPPON SURFACTANT INDUSTRIES is our main factory. We have two factories located in Tochigi Prefecture, and they do most of the manufacturing of our products. Evaluation and testing is done by Nikoderm Research. The company evaluates the safety and efficacy of the ingredients in our products. The other four companies that make up the group are Bergerac Japon under license from Chroma Durlin (France), Nikko Chemicals Shanghai and Nikko Chemicals Singapore.
When you became president in April of this year, Nikko Chemicals and Cosmos Technical Center merged to create the current holding company structure. Can you tell us more about the motivation for this merger?
Until March of this year, one of our companies, called Cosmos Technical Center, was doing research and development. We had another separate company called Nikko Chemicals that focused on sales. This setup lasted for about 20 years. There are some advantages to companies being independent from each other and focusing on their own profitability, but society has changed and now requires us to quickly make adjustments in terms of research and development. It also requires us to consider environmental factors and keep abreast of changing laws and regulations. Many of our customers require a quick response, so we decided to combine our sales department with the research and development department to meet their requirements. We hope to improve the quality of our products through this synergy.
What is the impact of Japan’s demographic decline on the quality, safety, stability and speed of your business? What challenges and opportunities does NIKKOL GROUP face when it comes to responding to Japan’s changing population?
We have been diversifying and recruiting to address workforce shortages for quite some time. We are actively recruiting foreign workers. As they tend to stay with us longer, we will continue to accept foreign workers. There is a lot of potential talent abroad. We also diversify when it comes to our production. However, there is a limit to this. We are trying to move towards automation and robotics wherever possible. We incorporate data analytics and RPA (Robotic Process Automation) into our operational processes.
You announced your participation in the EDDI (Emulsion Dynamics and Droplet Interfaces) project in March, a joint international collaboration between academia and industry sponsored by the European Space Agency. How did you get involved in this project as the only Japanese participant and what role do you play?
It’s not actually making a profit at this point. What we gain from this is enabling employees to realize their hopes and dreams. Our main products are surfactants and we have developed a unique high purity surfactant. High purity surfactants are widely used in academic research. As our product is well known in academia, the EU space agency asked us to join the EDDI project. The purpose of the research is to investigate the effect and movement of surfactants in space and as part of a study to better understand the future capabilities of humans living in space. Another project we are currently working on is in collaboration with the University of Florence to clean historic paintings. We develop a surfactant that only removes dirt and dust on the surface of paintings without damaging the paintings themselves.
What role does collaboration play in your company? Are you currently looking for new opportunities to partner with organizations or companies abroad?
Most of our collaborations are with foreign companies. We have established a joint venture Aprinnova with Amyris from the US. They are an industrial bioscience company. We combine their biotechnology with our colloidal technology to develop a new substance. Ten years ago, a product called “NIKKOL Sugar Squalane” was developed and marketed. It is derived from shark liver oil and acts as a moisturizer. It can now be extracted from olive oil and rice. We have developed a sugar squalane that is more sustainable. We produce it by fermenting sugar cane. Aprinnova was developed to ensure a stable supply of squalane products. Sugar squalane is now preferred over olive squalane in Japan.
What is the current focus of your research and development? Do you have an ongoing project you can share with us?
Sustainable development of ingredients is our main focus. By combining biotechnology with our colloidal technology, we want to develop a new and sustainable type of material. We have established a joint venture since 2016 that focuses on the development of a new squalane, NIKKOL SUGAR SQUALANE.
Are you actively pursuing overseas joint ventures?
Yes, we are interested in pursuing overseas joint ventures with attractive companies.
You began your presidency with a three-month lockdown in Shanghai and a war in Ukraine. As a company with a global distribution network and global sales operations, how do you mitigate and manage the logistical disruptions that affect your overseas business?
Our company was hit hard because we import most of our ingredients. We carry out risk management in relation to the PCP (Preventive Control Plan). We provided a secondary supply chain that we could turn to for our essential ingredients. If one country has problems, then we can source our ingredients from other sources. Our products are used not only in cosmetics, but also in the medical and pharmaceutical industries, so stable supplies are very important. We have established a good relationship with our suppliers and communicate with them frequently to know the latest updates that may affect our production. We diversified and stockpiled to adapt. We also have our two main factories in Japan, but we also have our factory in Singapore which supports the Japanese manufacturing. Our risk management was triggered by the Great East Japan Earthquake. This experience has allowed us to diversify our supply and production channels. We only have two factories in Tochigi, but we have ten warehouses strategically located around Japan, allowing us to diversify, reducing risks if necessary.
How did you mitigate the effects of COVID? Many of the pharmaceutical and cosmetic ingredient suppliers we spoke to mentioned that this is a silver bullet in many ways, especially in terms of increased demand for personal care products. Can you tell us about the impact of Covid on your business?
Many Japanese cosmetic companies are our customers. On average, our sales haven’t dropped that much. We saw a decline in sales of lipstick, blush and sunscreen, but there was an increase in demand for moisturizing milk, shampoos and conditioners. Domestically, we saw only a small drop in sales. On the other hand, the US, Europe and China recovered from COVID quite early, so there is an increase in demand.
Can you tell us more about your international expansion strategy?
We have built a network in over 50 countries. We particularly focus on five countries in Asia: China, South Korea, Thailand, India and Indonesia. Not only that, but we have come up with marketing strategies that cater to each specific country, such as conducting seminars, creating local websites, etc. We are considering the possibility of establishing local bases so that we can better penetrate individual markets.
Your company is celebrating its 76th anniversary this year. If we go back in 4 years, what goals and dreams would you like to have achieved by then for your company?
As part of our medium-term plan, we have 25 goals or targets until 2030. When you come back in four years, I’d like to have met most of those goals and made significant progress on the others.
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