Market Shrinking Globally and Companies Being Weeded Out in Field of Petroleum Test Instruments
Tanaka Scientific Ltd. was established way back in 1901 as a manufacturer of scientific instruments. Starting in the late 1950s, it narrowed its focus to the production and sale of test instruments for petroleum. About 70 percent of the domestic customers for its instruments, used for inspections to ensure the quality of petroleum, are petroleum refiners or petroleum wholesalers, but the firm also ships to electric power companies, the auto industry, the fire department, and petroleum related labs and certification associations. It used to export to a U.S. company on an OEM basis, but in the 1980s began direct exports under its own brand. Petroleum refineries operate 24 hours a day 365 days a year, so the company's instruments require a quick repair and service system. Accordingly, finding and building up dealers have been essential for opening up its foreign markets.
Petroleum refineries are built not only in the oil producing countries but in all sorts of areas near consumption centers. Accordingly, the company has dealers in over 40 countries around the world to assist it export directly.
The market for petroleum test instruments is however shrinking not only in Japan but in the world as well. Companies are being weeded out. At the present time, the global market is said to be worth 10 billion yen a year. About 60 percent of this is in the hands of German and French manufacturers backed with American capital. The remaining 40 percent is split by seven to eight companies including Tanaka Scientific. That is, the market is dominated by a handful of western companies due to their fame. Latecomers like Tanaka Scientific have to fight for a piece of the market through price competitiveness and high quality.
Increasing Business Opportunities Starts with Corporate PR
Mr. Shimodaira has been involved in PR and promotion of not only his own company's development, but also the Japanese scientific instrument industry through the Japan Federation of Scientific Instrument Associations, for example, producing industry directories and taking part in specialized exhibitions in the West. With the advent of the Internet and the need for PR through electronic media, the firm has set up its own home page and has studied constructing a specialized site for scientific instruments by the industry. In the summer of 2003, it could publicize business projects of member companies together with JETRO through
Tanaka Scientific only began
publicizing business proposals at TTPP a half a year ago. While it not yet had
any fruitful inquiries or business discussions, it considers this part of its
corporate PR in the same way as placement of ads in specialized journals.
Further, it cooperates with the Japan Cooperation Center for Petroleum by
accepting visits in the Center's program for training engineers of oil
producing countries. It considers this corporate PR as well.
Mr. Shimodaira wants to strengthen the firm's export business (ratio of
exports to total sales currently at 65%) so as to increase its share of the
global market (currently 5%) and capital standing. Further, he would like to
approach fields other than petroleum through industry university cooperation.