Dr. Kure: Taiwan's Hand Tool Makers Should Team Up with Japan in Global Marketing

One of the consequences of the global financial tsunamis is that Taiwanese hand tool manufacturers have prepared themselves to explore new overseas markets to reduce their overdependence on the U.S. and European countries in the past few years. One of the top overseas markets on Tawain's list is Japan, which was the world's second-largest economy until 2010 when China moved into that position. Japan both has a mature hand tool industry and a better relationship with Taiwan than it does with China.

Due mainly to different business orientations, Taiwan and Japan's hand tool industries hadn't had many business exchanges in recent decades. But the situation between the two countries has started to change as both have been striving to create more effective strategies for sustainable development in the face of underselling by emerging rivals. Another factor involved in this change in business relations between the two countries has been the massive earthquake in northeastern Japan on March 11, 2011, which paralyzed local supply chains for a period. From this experience Japanese manufacturers have learned more about the importance of securing backup production lines overseas.

Organized by Taiwan Hand Tool Manufacturers' Association (THTMA), the visit of the business delegation to Miki City, central Japan, in mid 2011 has been successful as a means to improve the partnership between the hand tool industries of the two countries. According to THTMA chairman Mark Lin, the Taiwanese delegation met with over 30 Japanese hand tool companies, which has helped to bridge the business gap between the two countries.

Although the visit of the THTMA delegation to Miki City in Japan has been a success, most Taiwanese hand tool manufacturers agree that they still have a long way to go in building positive business connections with their Japanese counterparts. Part of the reason why this is a long-term process has to do with cultural and linguistic differences between the two countries.

In an interview with CENS, the representative of Tunghai University's Committee of International Education and Program in Japan, Dr. Yukin Kure, who is also the CEO of Blue Ribbon Global Co., Ltd., a flourishing Taiwan-based business consulting company, discussed possibilities of how Taiwanese hand tool manufacturers might become more involved in the Japanese market based on his decades of experience with the country.

Essential Characteristics of Japanese Companies
Kure, who has a Ph.D. in Marine Science and Technology from Tokyo University, said that the culture of Japanese companies is very different from that of other countries of the world and is widely regarded in Japan as an essential characteristic of every company.

According to Kure, Japanese business owners are focused on leadership traits developed from both their passions for and commitment to work. “In a Japanese company, the business owner and managers tend to have exemplary roles to help cultivate a sense of solidity and good chemistry between employees,” he said.

Kure also said that in addition to having a continuous practice of improving technologies in the pursuit of providing the highest quality products Japanese companies have also focused on helping employees enrich their own lives. Referring to Nitori Co., Ltd., a well-known Japanese supplier of budget home furniture, Kure said that the company provides full training courses to its new employees and requires them at the end of the training to set personal goals regarding what they hope to achieve when they're eighty years old and also to consistently review and modify their goals during their time with the company.

“Nitori's practice of personal goal setting is a very interesting and effective means to urge its employees to be fully engaged in personal achievement,” Kure said. “This does not merely enable employees to constantly enrich their value for both the company and themselves during the process of reviewing and modifying their personal goals; it also allows the company to evaluate the performance and character of each worker.”

Another aspect of company culture in Japan is that Japanese companies regard the craftsmanship of experienced workers as a valuable asset. Veteran workers with consummate craftsmanship have a high profile in the company as a result of their achievements and contributions, which provides young workers with a physical symbol to both learn from and challenge. Kure said that this sort of company philosophy based on apprenticeship is helpful in creating both a deep sense of honor among workers and good chemistry between veteran and young workers. “In short, Japanese companies are dedicated to moral development in the organization, and they pay attention not only to customer satisfactions but also to employee satisfaction. Some even opine that an employee's morale at work is key to a company's success and that a 10% increase in morale is believed to generate bigger profits for the company.”

Criteria of Taiwanese Manufacturers
In terms of both manufacturing and R&D capability, Kure thinks that Taiwanese hand tool manufacturers can match their Japanese counterparts. But he also said that Japanese companies tend to use additional criteria in partner evaluation and selection.

In addition to manufacturing and R&D capabilities, Kure said that Japanese companies also audit partners from other standpoints, including company culture, operation procedure, and sense of commitment to and passion for work, so that they are assured of a reliable long-term partnership.

“Japanese companies tend to trust those who have sound management systems, backgrounds in a positive company culture, and specific blueprints for future development,” Kure said. “They strongly believe that these parameters can better gauge a company's quality and integrity.”

Based on his experiences of educating Taiwanese hand tool companies about management reform and reorganization, Kure has concluded that most Taiwanese manufacturers, though successful in built-to-order production, have yet to achieve the necessary development in sound management systems and delicate company cultures, which he believes will probably create obstacles in their pursuit of future partnerships with Japanese companies.

Three-Dimensional Competitiveness Analysis
To reinforce the notions about management systems and company cultures, Kure suggests that Taiwanese manufacturers carry out the so-called three-dimensional competitiveness analysis.

After his speech at the THTMA general meeting, Kure spoke again about the concept of the analysis tool which has been used extensively by Japanese companies in reviewing their own competitiveness from three dimensions, including manufacturing and R&D foundations, operating procedure and organizational standards, and a sense of passion for and commitment to business.

Kure said that Taiwanese manufacturers could learn from what they have seen in Japan and in this way develop both an efficient operating procedure and organization management standards of the highest quality in a short time. Once these goals have been reached, Taiwanese manufacturers must continue to work to cultivate a deeper sense of commitment to and passion for their work. “A sense of commitment and passion for business is very important in company cultures, and if Taiwanese manufacturers can continue to develop these qualities in themselves they will become even more worthy of the Japanese people's recognition and trust,” Kure said.

Cooperation on Global Promotion
Asked about possible strategies for Taiwanese hand tool suppliers in exploring the Japanese market, Kure said that most Taiwanese manufacturers will not be able to penetrate the market, mainly due to the strong competition of local suppliers. Kure said that instead of attempting to compete, Taiwanese manufacturers should try to penetrate the supply chains of Japanese suppliers.

“At the moment Japanese hand tool suppliers can compete more effectively than most of their foreign competitors by relying on their know-how and technology,” Kure said. “But since they can't match either the capacity or prices of emerging rivals, in recent years they have eagerly been seeking production lines overseas in an effort to expand their own production capacity. And I think they have been working on this even harder since the March 11 earthquake. If Taiwanese companies can continue with this approach they will be able to build stronger connections with their Japanese counterparts.”

Kure said that for a variety of reasons Taiwanese manufacturers are more likely than their competitors in Southeast Asia to become part of Japan's hand tool supply chain. According to Kure, these reasons include stable political situations, the high quality of workers, and excellent manufacturing capabilities. He also said that “Japan's market demand for hand tools is expected to surge in the coming years partly due to reconstruction projects following the earthquake and also partly due to growing consumer needs of DIY tools. Penetrating the Japanese company's supply chain will enable Taiwanese manufacturers to access the market more effectively than if they were to try to penetrate it by themselves.”

Taiwanese manufacturers must also cooperate with their Japanese partners on the joint development of the Chinese market, Kure said. He said that despite several decades of both business and cultural exchanges, Japan and China have yet to trust each other completely and this is disadvantageous to Japanese suppliers entering the market.

Kure said that as a result of this, Japanese hand tool suppliers have been profiting from their Taiwanese partners who have shared languages and cultures with the Chinese. According too Kure, this has enabled the Japanese to penetrate the Chinese market more quickly, especially now when ECFA (Economic Cooperation Framework Agreement) between Taiwan and China has made possible the cross-strait trading of hundreds of goods and services, including several types of hand tools.

“In fact, most Japanese hand tool suppliers are poor at global promotion and for this reason they need the help of their Taiwanese partners to continue with joint development of the Chinese market,” Kure said. He also said that the cooperation between the Japanese and Taiwanese hand tool industries should allow both Japanese companies to promote their products in China more effectively and Taiwanese companies to absorb Japan's prospective technologies and secure sustainable business. “In other words, through cooperation both sides can benefit from each other's strong points.”

At the end of the interview Kure said that since the Japanese pay much attention both to company culture and to added value, the best way for Taiwanese companies to secure long-term partnerships with their Japanese counterparts is to continue improving their competitive advantages and developing a commitment to and passion for work.

Japan's Hand Tool Exports and Imports Unit:NT$1 billion
Year	2006	2007	200	2009	2010	5-year Compound Annual Growth Rate
Import Value	13.231	14.213	13.102	9.521	10.106	-5.25%
Export Value	13.608	14.323	14.571	8.591	11.483	-3.34%

Source: Metal Industries Research & Development Centre

Japan's Hand Tool Exports by Continents Unit:NT$1 billion
Year	Asia	America	Europe	Oceania	Others	Total
2009	5.027	1.648	12.656	0.187	0.075	19.593
2010	1.028	2.088	15.769	0.205	0.100	25.191

Source: Metal Industries Research & Development Centre