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Kanekoseisakusho Co., Ltd., manufacturer of parts for medical equipment,
Utilizing exhibitions to attract deals with overseas medical equipment manufacturers

Monday, July 4, 2011

In the past, Kanekoseisakusho Co., Ltd., a manufacturer of parts for medical equipment, mainly traded with domestic companies. However, an overseas exhibition held two years ago marked a turning point, and the company subsequently stepped up its overseas expansion and was able to secure direct transactions with a number of overseas companies. The company's strategy of exclusively targeting U.S. and European medical equipment manufacturers, emphasizing its sophisticated processing ability and cultivating new customers through exhibitions and business meetings was instrumental in acquiring the direct transactions. Moreover, the company's success in cultivating overseas customers brought the employees together, which, in turn, enabled it to overcome hardships, including the destruction of the Fukushima Plant by the Great East Japan Earthquake and the resulting disruption in production. On June 8, JETRO New York interviewed Mr. Harufusa Kaneko, President.

The overseas exhibition marked a turning point

"Two years ago, we never even dreamed that we would be able to cultivate overseas customers on our own," says Mr. Harufusa Kaneko, President of Kanekoseisakusho Co., Ltd., a manufacturer of parts for medical equipment and aircraft (Iwatsuki-ku, Saitama-shi; Number of employees: 80). Kanekoseisakusho, which has been manufacturing optical equipment parts for medical devices since its founding in 1956, began to manufacture parts for endoscopic instruments in 1975 and aircraft engine parts in 1984, and it has been aggressively expanding into new areas based on the strength of its sophisticated precision processing technology. In August 2004, Kanekoseisakusho acquired "JIS-Q9100" certification, an advanced quality-related certification required by the aerospace industry, and in 2007 the company was selected as one of the "300 of Japan's Dynamic Monozukuri (Manufacturing) SMEs" in recognition of its ultra-precision processing technology for medical instruments and its sophisticated technology that has been recognized by the aerospace industry. It was in November 2009 that Kanekoseisakusho, the holder of such advanced technology, began to contemplate cultivating overseas transactions.

"Until then, we conducted our business primarily with Japanese companies, and even in terms of medical equipment and aircraft parts that were used overseas, we were usually subcontracted to supply parts to Japanese companies, which then sold the parts to the overseas manufacturers. We believed at the time that as long as we had the technology it would be enough to simply deal with the Japanese companies, just as we had done for the past 50 years. However, the staggering drop in domestic demand during the recession which followed the Lehman shock made it necessary for us to contemplate cultivating overseas markets," recalls Mr. Kaneko.

At that time, Kanekoseisakusho learned that Medical Design & Manufacturing (MD&M) West, a trade show for medical equipment, was going to be held in Anaheim, a suburb of Los Angeles, in February 2010. Mr. Kaneko states that the company's decision to participate in the trade show for the purpose of conducting market research turned out to be the turning point in their overseas expansion.

"We only had 3 months to prepare our exhibition for the MD&M West, and we were unable to make any special preparations as this was our first time exhibiting at an overseas exhibition. However, our strategy of exhibiting our parts and calling attention to our superior technology paid off, as we caught the eye of several European and U.S. medical equipment manufacturers, which resulted in numerous inquiries and face-to-face meetings," says Mr. Kaneko.

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Mr. Kaneko, President of Kanekoseisakusho, is focused on cultivating the overseas markets

Exclusively targeting manufacturers of finished products in Europe and the U.S.

Encouraged by the positive responses at the overseas exhibition, Kanekoseisakusho then decided to narrow down its scope to parts for medical devices used in surgical procedures, and it proceeded to approach the manufacturers of finished medical devices. The company subsequently utilized JETRO's " quick research services " by overseas offices (Japanese only) for market research and JETRO's " business appointment services " (Japanese only) to make appointments for business meetings with the overseas medical equipment manufacturers. Additionally, in February 2011 the company participated in the MD&M West for the second consecutive year, as well as the China International Medical Equipment Fair (CMEF) held in Shenzhen, China in April and the Medical Design & Manufacturing (MD&M) East held in New York in June. The company's strategy of targeting specific international exhibitions and holding face-to-face meetings has paid off, and it has successfully concluded deals with three European medical equipment manufacturers.

Mr. Kaneko says, "The reason why we were able to cultivate overseas transactions was because we narrowed down our scope to European and U.S. medical equipment manufacturers when participating in exhibitions and holding business meetings. Even at the CMEF held in China, we targeted European and U.S. medical equipment manufacturers. Manufacturers of finished products in Europe and the U.S. seek high precision technology."

Mr. Takashi Murakami, who is assisting Kanekoseisakusho as JETRO's export specialist in discovering promising export projects, explains, "For small and medium-sized manufacturers of parts for medical equipment, targeting European and U.S. manufacturers of finished products is an effective strategy in cultivating overseas transactions. Especially, as trade shows held in the U.S. are usually subdivided into individual specialist areas, it is important to emphasize the sophistication of the manufacturer's technology, such as its parts-processing technology. Additionally, when tackling emerging markets such as China and India, there are two possible strategies: to exhibit finished products that can be used without processing by the local companies; or to target European and U.S. medical equipment manufacturers visiting the exhibition and call attention to the company's sophisticated technology."

Overcoming the destruction of the Fukushima Plant by the Great East Japan Earthquake

In response to the increasing orders for precision-processed parts mainly for medical equipment, Kanekoseisakusho opened a new plant at the Iwaki Yotsukura Industrial Park in Iwaki-shi, Fukushima Prefecture in January 2011, which doubled its production capacity. The new plant was built because the main plant in Saitama-shi could no longer handle the increasing number of orders. Subsequently, the new plant was devastated by the Great East Japan Earthquake, and production was halted. However, immediately after the earthquake, the company relocated the employees and machinery from the new plant to the main plant and was able to fill the orders from its customers.

"What helped us overcome the hardship of the earthquake was the unity which we achieved as a company through our sense of pride and accomplishment at successfully cultivating overseas customers on our own as well as our unflinching spirit of "Monozukuri," which allowed us to take on the complicated technical demands of our customers. In order to contribute to the early recovery of Fukushima, we hope to resume operations at our Fukushima plant by August and continue our "Monozukuri" in Fukushima," says Mr. Kaneko.

It seems that the aggressive development of overseas transactions has been the driving force behind the company being able to overcome the destruction of its plant by the Great East Japan Earthquake and the disruption in production.