Masato Yamaji is the second-generation boss of the Sanwa Dengyo Group, a plant engineering business headquartered in Kagawa Prefecture, with 260 employees across the group’s seven companies. Like many firms in Japan, Sanwa is facing the challenge of a mature and shrinking domestic market. The market has declined “by more than half” compared with the boom times before the bursting of the economic bubble. Survival now depends on finding new markets, whether through innovation or going overseas, while finding ways to slash costs.
Typically the plant-engineering business in Japan relies on domestic demand, Mr Yamaji says, with most SMEs reluctant to investigate opportunities abroad. Choosing to adopt a proactive approach, however, he decided to shift some of the group’s operations to China more than nine years ago, despite concerns about the risks of technology and know-how being leaked to local competitors. By capitalising on the company’s strength in IT, Sanwa Dengyo has established a system whereby the engineers in Japan can use online tools to closely liaise with and manage the staff in China who programme the factories’ automated systems and design plant facilities. Moreover, the system also allows young Japanese engineers to train and manage staff—a way of giving them management experience before they might normally obtain it.
The company’s early presence in China has also led to its securing contracts for the maintenance and modification of Japanese companies’ local plant facilities. This is an area of business it is seeking to grow further, leveraging “the sixty years of track record” it has in Japan. While Mr Yamaji describes this side of the business as “high-risk and low-return”—meaning the group’s domestic competitors are unwilling to do it—he suggests the company is not in a position to be choosy about the kind of work it takes on. “We will find a way into the future, even if it means taking on work nobody else wants to do.”
