Company Profile

– Company: Keio Denka Kogyo Co.,Ltd. (Tokyo,Japan）

– Year established: 1968

– Main business: Surface treatment (all types of metal plating of electronic and automotive components).

– Number of employees: 150 (total group)

– Expansion into Vietnam in 2014 (Binh Duong Province)

Remark

– The plating plant was built in 2014 in Binh Duong (Vietnam) because the company realized the limitations of its business in Japan.

– Before expanding overseas, the company commissioned B&Company to conduct a survey. Based on the results of the survey of customer industries, the decision to expand into Vietnam was made after comparison and consideration of other countries.

– Although the business in Japan has grown over the past ten years, the business in Vietnam has grown more significantly, with sales within the group now accounting for 30% of total sales.

– The company thinks that the creation of new businesses and the effect on human resources are also significant.

The plating industry in Japan and its expansion into Vietnam

– Keio Denka Kogyo is a company involved in ‘functional plating’, in which a metal film is applied to the surface of a material to enhance its functionality.

– The plating industry is undergoing major changes due to the need for technological development in response to the environment and new materials.

【Himeno Representative】

“For example, new materials using magnesium are being developed to reduce the weight of medical equipment, for which plating methods have not yet been established and need to be devised on a case-by-case. Compared to 10 years ago, the number of specialist plating companies in Japan has decreased by 400 to around 1,200.”

At the time, the company was worried about the prolonged economic downturn in Japan, unstable exchange rates and other factors, and decided to establish an overseas revenue base while it still had enough capacity.

【Himeno Representative】

“Although our business was growing, we felt that in the future it might become more difficult to carry out manufacturing in Japan. In addition, when thinking about the company’s growth, I also wanted to vitalize the company by having an oversea plant and doing ‘work across the world’ through plating technology.”

First, the company set up its own consideration system and requested an expert from the Organization for Small and Medium Enterprises and Regional Innovation. On a business trip accompanied by an expert, the company visited B&Company and asked for an investigation. In addition to Vietnam, Indonesia was also considered.

B&Company Image of survey report

【Himeno Representative】

“We asked B&Company, which had been doing business in Vietnam for many years, to research. At that time, we clearly planted to go abroad, but we weren’t sure where to go Jakarta in Indonesia, or Hanoi or Ho Chi Minh City in Vietnam. Based on the results of B&Company’s research to see if we, Japanese plating companies, could expand and work abroad, we made the decision to expand into southern Vietnam.”

B&Company listed about 300 Japanese metal processing companies in the provinces and cities around Hanoi and Ho Chi Minh City as potential sites for expansion. From the about 200 companies that responded to the enquiries, about 50 businesses with plating outsourcing needs were selected and analyzed. There were various types of plating, some of which were difficult to find in Vietnam. The balance of supply and demand differed by region.

【Himeno Representative】

“Using the study report, a comparison was made between the northern and southern parts of Vietnam. As a result, we received enthusiastic invitations from industrial parks in the south, and we thought that the south, where there are fewer competitors in the same industry, would be better. Also, we were referred to the extent to which there are companies that want plating.”

Estimated market sizes for the North and South were also compared, and it was found that the average volume of orders placed by one company differed by region.

【Himeno Representative】

“We also looked at the sales we could expect from the expansion, along with information about our own company. It was good to have this as one of the factors in our decision to expand.”

Along with other considerations, the decision was finally made to locate in Binh Duong Province, a neighbouring province to Ho Chi Minh City.

After expansion into Vietnam

In Vietnam, Keio Denka Kogyo has continued to expand, with about 50 employees at the time of the company’s establishment 10 years ago, but now has about 100 employees.

【Himeno Representative】

“Sales tend to be concentrated in the remaining areas. In our case, we have doubled in both headcount and sales compared to then.”

Sales at the Vietnamese subsidiary is also growing steadily and account for about 30% of the group’s total sales. Most of the customers of the Vietnamese subsidiary are new customers that were developed after the company expanded into Vietnam. The technology at the Vietnamese plant has improved, and of the 30 or so types of plating handled in Japan, the Vietnamese plant is now able to handle about 10 of them.

A new plant building is being added in 2023.

Scale of the Vietnamese subsidiary (KEIDEN VIETNAM CO., LTD.).

【Himeno Representative】

“90% of our Vietnamese customers are companies that we first met and started doing business with in Vietnam. 90% of our Vietnamese customers are companies with whom we first started business in Vietnam. The level of technology in Vietnamese plants has been improving, and recently the number of cases where products cannot be manufactured in Vietnam due to plating bottlenecks has decreased considerably. There are not many direct transactions with listed companies in Japan, but there are quite a few in Vietnam, and it feels like we are very close.”

Vietnam is also facing stricter regulations on environmental protection, while demand for new materials is increasing as the country’s industries become more sophisticated.

【Himeno Representative】

“In the case of Vietnam, we do not yet have an R&D unit, so we are importing technology established in Japan to Vietnam, but there are companies in Vietnam that are exploring the use of new materials to reduce weight. There are still few companies in Vietnam that have the technology to handle this. Therefore, we have started a process of consulting with them, making prototypes in Japan and then mass-producing them at our plant in Vietnam.”

Currently, the number of new projects transferred from China is increasing very rapidly.

【Himeno Representative】

“Many developing countries are growing at a fast pace, but they are concentrated in one area and only the capital city gets bigger and bigger first. In the case of Vietnam, the country is divided into Hanoi and Ho Chi Minh City, and there are various regions, so there are still opportunities to enter somewhere, and even latecomers like us could make it.”

Prospects for the future

【Himeno Representative】

“First of all, we want to bring our Vietnamese subsidiary up to the same level of sales as our head office in Japan. To achieve this, we will increase the number of types of plating. Another strength of the Vietnam plant is that it can also assemble small finished products in-house. If we do this well and increase our supply capacity, I think we will be fine.”

“I think it was good that we expanded into Vietnam. I think the encounters in Vietnam have had a positive impact on Japan as well. I am glad that 10 years have passed, including the revitalization of our company. We will do our best to become the number one plating company in Vietnam, and I hope that you will continue to cooperate with us.”

(Above: Interview with the company, published with permission)