Hioki about its rapid growth in Europe

»We lacked proximity to the market«

05. Mai 2021, 17:45 Uhr   |  Nicole Wörner

»We lacked proximity to the market«
© Hioki

Hioki is a well-established name in the measurement world. Nevertheless, the traditional Japanese company had only a limited presence on the European market for many years - until they opened their European headquarter in Germany in 2017. Facts and backgrounds in the interview.

Markt&Technik spoke with Hioki Europe founder Jim Shimizu and Manabu Watanabe, managing director of Hioki Europe, about Hioki's move into Europe.

Markt&Technik: Mr. Shimizu, Hioki has only had a branch in Europe for three years, but has been manufacturing measuring instruments since 1935. Why did it take so long for this step to happen?

Jim Shimizu (Hioki): Well, it’s actually somewhat difficult to understand in retrospect, but I think it could be explained by Hioki’s company culture. Hioki was – and still is today – a heavily engineer-driven company. Strategic business planning and decision making were primarily driven by the technical requirements of the time, and new technologies. We focused our attention on technical challenges, which prompted us to develop an extensive portfolio of testing instruments and methods for both R&D and maintenance & production testing.

At the same time, we weren’t focusing much on strategic business expansion and fast growth. Looking back, you have to question this approach in light of increasing globalization, because we all know that “the early bird catches the worm.” But we were – and are still today – proud to contribute to the development of state-of-the-art technologies with our products and solutions.

Was there a specific catalyst for taking this step in 2017?

Jim Shimizu: Despite our established position in the Japanese market, we realized that we would not be able to survive economically against the global competition over the long term unless we expanded. That’s why we first expanded our presence in the Asian market and then, in 1998, founded our first international branch in the US. Increasing demand for our products in Asia also led to the step-by-step founding of branches in China, Singapore and Korea. At the same time, growth in Europe had not developed in line with our expectations despite the great potential for Hioki products here.

What were the reasons for this slow development in Europe?

Jim Shimizu: Simply said, we lacked proximity to the market. Our experience in the US and China showed that direct contact with local sales partners and customers is absolutely necessary. Because of the geographical and cultural distances involved, our sales network in Europe at the time was not able to accomplish this for Hioki, so it wasn’t possible to achieve the growth we had anticipated.

What was the sales network like prior to 2017?

Jim Shimizu: The network of Hioki distributors in Europe had grown over time, but it had grown more organically than target-driven. In some countries we’ve been represented by partners in Europe for more than 40 years, but Hioki’s products often just complimented the portfolio of our European partners. The great distance to Japan made it difficult to get a handle on local markets. It was like being at a buffet: everyone automatically takes what they’re familiar with and what they like. The rest will easily be left on the table. Many of our partners only focused on those Hioki products which were easiest to sell based on respective compatibility and their own knowledge.

But to be fair, it also has to be said that Hioki was not able to provide sufficient support to its partners in Europe over the distance. To stick with the buffet simile, we – as the chef at the buffet table – could have made recommendations or given helpful explanations to more successfully communicate our menu and to encourage them to also approach and try unfamiliar foods.

And what was your new approach? What did you change?

Jim Shimizu: The European market is very diverse, and the situation in each country had to be reevaluated based on different requirements. We looked at the potential and market access of our partners in each country, which already led to our making some changes.

The DACH region (Germany, Austria and Switzerland) is a good example of this. Up until 2017, we only had one partner in Germany. We realized that we weren’t even close to being able to reach all our potential customers. That’s why we teamed up with more T&M partners and are now very well positioned, both in terms of regions and our portfolio, with a total of four technical partners. In Switzerland, we terminated partnerships with two existing partners and brought a new partner on board who’s a good fit for Hioki. Hioki products quickly convinced our new partners, and the new partnerships created a very positive dynamic for our brand in many countries. In Austria, on the other hand, we’re continuing our cooperation with the same partner as before, as they have the market covered very well there and our cooperation is working out well.

What aspects did you consider when choosing your partners?

Manabu Watanabe: At first, strength in the market naturally is of great importance. The portfolio also plays a decisive role, though. A six-channel power analyzer for development within the e-mobility sector needs a different sales channel than a clamp multimeter for the service field. In this consultation-intensive sector, we support our customers through highly experienced technical sales partners and now also have a team of product managers and application engineers at Hioki Europe further supporting our partners. For products like the clamp multimeters on the other hand, we need partners with good logistics including comprehensive inventory ensuring fast product availability. We didn’t have this previously, but it is essential for expanding business with transactional products. That’s why we decided here to partner with a high-service distributor, or HSD.

Just one HSD partner? Why not position yourselves more broadly here?

Manabu Watanabe: On paper, the equation looks simple: lots of HSDs mean lots of visibility and high turnover. But we are accomplishing and changing quite a lot in a very short amount of time. We have to be realistic and also take the available resources needed to serve such a channel into consideration. At the same time, it’s also easier for one partner – a strong one, of course – to invest in a previously not so familiar brand if potential channel conflicts are kept to a minimum. We feel we’ve found the right partner in Premier Farnell.

How severely is the current pandemic hindering your plans?

Manabu Watanabe: To be honest, not at all. Of course, it’s not very helpful if face-to-face meetings and trainings – especially with new partners – aren’t possible for a longer period of time because of travel restrictions int this set up phase. At the same time though, we’re just establishing communication with our customers and partners. The pandemic has made it very clear that communication overall is changing. One of our partners in Scandinavia described it very aptly: “Customers are working from home and even doing their grocery shopping online. Things definitely won’t go back to the way they were when the pandemic is over.”

This might sound like a platitude, but it’s absolutely clear to us that first contact with us will increasingly happen over the Internet. If we want to find out about or buy something in our private lives, we check Google or Amazon first – and our children check YouTube. Why should it be different in our professional lives?

So in your point of view, will the Internet make sales partners obsolete in the long run?

Manabu Watanabe: No, not at all. Measurement technology is a complex field where you can all too easily make a wrong – and quite expensive – purchase decision if you don’t get the right advice. What’s more, customers are increasingly looking primarily for solutions, not just products. It’s also clear, though, that the first personal contact with a customer doesn’t happen until after they’ve already found answers to their initial questions online. In this process, they have to find the right product from a competent partner and, in our opinion, it has to offer added value online as well.

You recently saw a change of management. What would you say the future direction of Hioki looks like?

Manabu Watanabe: When you change structures, especially at this speed, it always takes some time for the new arrangements to become established and be accepted. Our idea, though, is to create a long-term win-win situation for each and every Hioki partner. As a Japanese company, it’s very important to us to create and reinforce strong and long-lasting structures and relationships.

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