Takeshi Koarai
Representative Director and Senior Executive Managing Officer
Nisshinbo Holdings Inc.
Representative Director, President
Japan Radio Co., Ltd.

Maximizing Value through Core Technologies and a Solutions Orientation

Three Strengths

What are Japan Radio’s strengths?

Since our establishment in 1915, we have contributed to resolving various social issues based on wireless technologies, as indicated by our company name. Over the course of our history, we have cultivated three major strengths.

Our first strength is in core technologies, including communications, sensing, and data analysis. Our founding business was communications equipment and radar that contributed to vessel navigation and operation, but the use of wireless technologies not only facilitates communications with remote locations, they also contribute to the resolution of customer and social issues by using radio waves, ultrasonic waves, and other type of waves to visualize what is invisible to the naked eye or light. As the use of wireless technologies is expected to continue expanding, the skills and expertise we have cultivated over many years in this area are a great strength.

Our second strength is the ability to provide customer value, namely, the ability to identify and resolve customer issues. Even if we are able to resolve a customer's issues with technical designs, we cannot see the essential underlying problem unless we understand what kind of problem the customer is facing in the first place. For example, in delivering disaster prevention systems, dam control systems, and other social infrastructure systems, we provide installation and maintenance services, which enables us to understand customer inconveniences and problems. This knowledge is then incorporated and utilized in subsequent proposals. We will continue to steadily enhance our ability to provide customer value by viewing our technologies from the customer’s perspective and linking this to proposals.

Our third strength is integration skills combining multiple technologies. As there are many issues that cannot be resolved by refining a single technology, the comprehensive combination of various technologies required to resolve issues from within or outside the Company enables us to provide the means for resolving issues and demonstrating our substantial strengths.

What kind of expertise in core technologies have you accumulated over the years?

Radio waves and light are used as means of communication and sensing to extend the range of human activities. However, when there are obstacles that obstruct the path of radio waves or light, compensating for the obstructed area becomes a very critical point from a technological perspective. Various compensation methods can be considered, but one of the difficulties of expertise is whether the optimal solution can be provided by comprehensively taking into account degree of importance, stability, and cost, among other factors.

Further, as radio waves and light travel in straight lines, they cannot reach the opposite side of the Earth. Even if there is nothing obstructing their path, it is necessary to use the ionosphere and satellites to relay radio waves and send them to the required area. In addition to technology itself, expertise is also needed to know how to cover these areas. As an example, although a large number of mobile phone base stations are installed to cover a given area, there will still be gaps in that area. In this case, rather than adding base stations at unnecessarily high costs, antennas can be tilted slightly to cover gaps in the area. We have accumulated wireless technologies and the expertise enabling us to rectify inconveniences caused by wireless technologies and provide comprehensive services.

The purpose of communications is to convey information possessed by the sender to the receiver, while the purpose of sensing is to ascertain conditions by emitting radio waves and analyzing their reflection from the surrounding areas. There are a wide range of needs for sensing applications, including the safe navigation of vessels on the sea, self-driving automobiles on land, and weather radar in the sky, which we were first to provide in Japan. We have expanded the potential uses of sensing from the perspectives of what and how it is used to see. In the healthcare field, our subsidiary provides ultrasound imaging equipment that uses ultrasound sensing technology to ascertain the condition of internal organs. Navigational equipment installed on vessels in particular requires operation under exceedingly adverse environmental conditions, including vibrations, oscillations, weather phenomena, and temperatures, while also being cost-effective, which requires considerable expertise. We are confident in our outstanding competitive advantages derived from expertise we have accumulated in this field, such as excluding sensing information on ocean waves not directly required for navigation, or conversely, extracting only that wave information necessary for avoiding danger, and more recently, for supporting automatic navigation.

IoT is also leading to DX through the analysis of data collected by devices and data analysis that creates value by discerning the significance of events.

Growth Strategy

How will you achieve growth using these strengths? What is your growth strategy?

The basis of our growth strategy is to promote a solutions orientation in all businesses. In other words, our products and services will become a means to resolve customer problems and social issues. Depending on how they are used, even parts and materials can become solutions that resolve issues.

Social solutions and Offshore solutions have already established a certain business scale as our earnings base, and Industrial solutions and Medical and Healthcare solutions will drive future growth.

In the Industrial solutions domain in particular, although we can see the potential for market growth, the speed of change is rapid and there are many players entering the market, so the key is how to demonstrate superiority while keeping pace with the speed of change. For example, in primary industries such as fisheries, forestry, and agriculture, there may be opportunities to create new solutions by focusing on the air, land, and sea, including drones, while in secondary industries such as manufacturing, various business opportunities are opening up through innovations that include IoT systems in factories. We will fully demonstrate our core technologies, the value we provide customers, and integration skills represented by our strengths, and provide solutions that contribute to quantification and the elimination of waste in operations by viewing issues from the customer's perspective, even in areas the customer has not noticed before. In developing solutions, we will continue to enhance our strengths, and in areas where we need to reinforce our strengths, rather than insisting on going it alone, we will seek various forms of collaboration, ultimately leading to the arrangement that best meets customer needs.

At the same time, in the Social solutions domain, the way people work and society itself are undergoing substantial changes centered on sustainability. With investments being made in GX and DX, we will focus on providing effective social infrastructure systems in this area. Regarding developments in global markets, we feel there is great potential to expand systems including those for dam control, for which we hold a 40% share in Japan, to emerging markets in Southeast Asia and other regions. While we have provided ODA and other development assistance schemes in the past, the challenge is to reduce costs with a focus on introducing and operating these systems through independent efforts in each country. Further, if we can promote the effectiveness of multi-use social infrastructure systems for both disasters and peacetime, I believe this will lead to greater demand, so this is something we will consider and develop going forward.

Increasing Profitability

How do you plan to increase profitability?

If asked whether our current level of profitability is satisfactory, I would have to answer no. One of the main reasons is that we are easily affected by the external environment.

For example, in disaster prevention systems for municipalities, investment in disaster prevention and mitigation tends to decline for some time after a disaster has passed. While social infrastructure as a whole is not in a growth phase due to population decline, it is important to steadily continue capturing demand for maintenance and upgrades, but mass production cannot compensate for profitability in the one-product-one-order business for government offices. To reduce costs in systems businesses, we had to take a scalpel to the way we operate, including improving overall operating systems efficiency, while also introducing a new backbone system. We will visualize costs incurred in the installation of parts and equipment and trial process prior to full-scale operations, and improve profitability by increasing efficiency in these processes.

Further, with recent advances in software technology, it is now possible to customize software while using hardware to cover the general-purpose parts of a system, which tends to be viewed as individual optimization. In the future, we will consider a subscriptionbased business in which we both sell the system and charge for system operation on an ongoing basis. We will also strengthen profitability itself by promoting business transformation from“ things” to“ experiences.”

Growth Investments and R&D

What is your approach to growth investments and R&D?

In addition to 5G-related investments, AI and other technologies that utilize digital data are essential for providing the solutions business comprising the core of our growth strategy. We will invest in these new communications technologies and data analysis platforms based on our view that they are indispensable for growth.

With regard to R&D, as there are many areas, such as sensor fusion, where complex sensing technologies, particularly radar, will enable us to achieve what has not been possible in the past, we will continue research that includes customization efforts.

Communications is an area where standardization prevails and there is little room for customization due to the necessity of interconnectivity. However, rather than using standardizing products as-is, this is an area where value can be increased with the addition of slight innovations outside of standardization. For example, mobile phone base stations provide service to surrounding smartphones, but transmitting data from smartphones requires either the installation of optical cables or the use of different radios with frequency bands other than those used for the service frequency to relay data, but the cost of installing radio equipment at all base stations would be enormous. In response, we have a technical solution that divides the same frequency band into relay and terminal services in a small private network and extends the service area. We are expanding the range of applications for this solution with a view to developing it for small base stations. In the future, when 5G advances further to 6G, we will see terahertz frequencies, which are higher than current frequencies, as well as the emergence of circuits able to pass light instead of electricity. New communications technologies, including technologies for the application of light and terahertz frequencies that are not yet in practical use, are an area that is rapidly advancing, and we will continue to monitor future trends in this critical area.

Human Resources

How do you view the human resources who will drive this growth strategy?

We must transcend the culture that has been ingrained in our organization for more than 100 years of manufacturing history to expand business with a solutions orientation that aims to identify and resolve issues. To change our organizational culture, the development of human resources able to promote solutionsoriented business is an important aspect of the overall Group growth strategy.

Our corporate culture is highly focused on problem-solving, but we tend to solve problems based on technological strengths, which limits our perspective on non-technical solutions. The challenge we face is to create something larger from a broader perspective.

In considering human resource development, while it is important to nurture experts, there is a limit to how broadly one's perspective can be expanded through transfers within the company alone. I believe the first step in reforming our organizational culture is to continuously provide education focused on career development that enables employees to maintain a constant awareness of their roles within the overall direction of the Nisshinbo Group. In dialogues with employees, I encourage employees to change the culture and not be satisfied with the status quo.

Contribution to the Environmental and Energy Field

Given the Nisshinbo Group business policy of“ realizing a super-smart society as an Environment and Energy Company group,” what initiatives does Japan Radio promote as an Environment and Energy Company ?

As an Environment and Energy Company, we believe we can contribute through business from two aspects. First, we are developing business that contributes to disaster prevention and mitigation in the face of increasingly severe natural disasters caused by climate change. Second, we contribute to the reduction of CO2 emissions during vessel navigation by collaborating with large commercial ships that use our sensing technologies and IoT. With vessels, the shortest and quickest routes do not necessarily lead to optimal fuel efficiency. We believe our Offshore solutions, which select optimal routes based on fuel efficiency, can make a significant contribution to emissions reductions.

Group Synergies

What are your thoughts about synergies created within the Nisshinbo Group?

Wireless and Communications and Micro Devices fall under Electronics. In some cases, we have been building cooperative systems for 30–40 years to create greater efficacy by confining the functionality of semiconductor chips, sensors, and other devices into a single small frame. The Group’s Chemicals business is also a major strength in terms of the parts and materials we require, allowing us to rethink functionality and performance from a materials perspective.

The first step in realizing Group synergy is to maintain a constant awareness of Group-wide technologies and know-how as a means of resolving issues. To this end, we will focus on developing human resources who can fulfill their roles while being aware of the Group’s overall direction, then link this to the creation of value for our Company and the Nisshinbo Group as a whole.