JAPAN PURE CHEMICAL : IR Info > Interview with the President

We recognize that chemicals companies of the 21st century should be fine chemicals companies competing with highly functional and highly profitable products backed by scientific theory founded in chemistry.
Japanese chemicals manufacturers have led the world, especially in electronic materials. Our rare metal plating chemicals belong to the electronic materials category. As a manufacturer of rare metal plating chemicals, our aim to become a manufacturer of fine chemicals with a world-class reputation remains unchanged in the years following 2010.
One difference from conventional medium-term business plans relates to the fact that certain basic research programs progressed during the decade that followed the management buyout (MBO), reaching the stage of new product development and market testing. We have set in-house rules for turning these outcomes into new products and releasing them effectively in the market, and for protecting our intellectual property.

Our Technical Division is in charge of research and development. New plating chemicals move to sales when electronic parts test-produced using the new plating chemicals developed are appraised favorably by device manufacturers, and electronic devices equipped with the electronic parts have been certified by system manufacturers as satisfactory. Our Sales Division is responsible for deciding to which sectors of industry the new products should be promoted, at what prices. To ensure a smooth transition of new products from the Technical Division to the Sales Division, a meeting to confirm performance is held among members of the Board of Directors, General Managers, development personnel and sales staff when the initial certification has been obtained, to achieve a consensus on the properties, prices, areas to be promoted, shipment inspections and other features of the new products.
How many meetings to confirm performance and what contribution the new products make serve as indexes of how capable we are as a fine chemicals manufacturer.
In the 2010-2012 Medium-Term Business Plan, we have set a target of obtaining 20% or more of our total earnings from new products that have been certified in the past five years.
Although this is a very demanding target, I expect our young engineers will rise to the challenge.

First, with the recruitment and allocation of human resources, it has been our policy to allocate new employees to the Technical Division first, so that they can study our products. The experience has proven to be effective when these employees are later assigned to work with the Sales, Manufacturing, or Operations divisions. Since the MBO, we have been able to recruit capable new graduates, and today two-thirds of all employees have experience working with Technical Division. They have also been assigned to work with divisions other than Technical Division, and have served as key persons in the sales expansion and technical service activities of Sales Division, and in cost-cutting activities for source materials acquired by the Purchasing Division.

Among the specific outcomes attained, the Technical Division released BAR7, which has earned high marks in the connector industry. This was the greatest achievement in 2008-2009, attained through the typical R&D process for fine chemical products. This process begins with a search for new compounds, followed by volume synthesis and environmental tests. They are then registered as existing compounds and introduced to new products. Finally, the products are evaluated by the market and certified by customers. The experience is expected to prove helpful for the efficient development and release of new products.

As for the Sales Division, there is no change to the system where employees who have worked with the Technical Division are selected to work with the Marketing Division. The strategy also remains the same, to quickly detect the needs of the electronics industry, lead efforts to release new products, and make them de facto standards. In the medium-term plan for 2006-2009, we foresaw that the market of rare metal plating chemicals would gradually shift from Japan to Southeast Asia. This ultimately proved to be the case, and so we have established technology service offices in Shenzhen, China, and Taipei, Taiwan, dispatching younger staff aged around 30. I expect these young people will effectively identify needs in the industries of emerging Southeast Asian countries and promote new products.

With the Operation Division, the internal control system went into full-scale operation in 2009. Among our achievements in 2009 is the selection of the quality control (QC) manager in the Technical Division for transfer to the Purchasing Division, a move that has reduced the cost of the source materials we purchase. We will continue advocating the principle of the able minority in our personnel measures, to maintain both a flat and agile management organization and an internal control system. We aim to expand the scope of our businesses, by cultivating expertise in each employee and transferring them in rotation.

For the Manufacturing Division, we will adhere to the principle of the able minority by outsourcing tasks effectively. Synthesis of new compounds and rare metal compounds will be outsourced under nondisclosure agreements (NDA). We will reduce fixed manufacturing costs by limiting our manufacturing tasks to formulation (mixing).



Each of the following research themes was introduced after the MBO in 1999, and are nearing the final phase of development (market evaluation and certification) following basic research over periods of five to ten years. All of these technologies have shown that they have the potential to alter the generations of our major products, and they are expected to form the core for future profit growth. (1) Gold electroplating technology BAR7, development of which started in 2005, was released in 2008. As of 2009, good progress had been made with certification, mainly by domestic customers, and the product began contributing to higher profits from our hard gold plating. At the same time, development staff have been dispatched to Shenzhen as expatriates, to promote the product overseas. In 2010, the product is expected to generate even greater profits in line with the proliferation of smartphones. (2) Palladium electroplating technology The use of the NANO2 bath with Ni/Pd/Au pre-plated frame (PPF) electroplating for lead frames started in 2003, and was certified in 2009, after six years of R&D. The ratio of lead frames replaced with PPF is said to be about 20% worldwide, and the market is expected to grow in 2010 and beyond. (3) Electroless palladium/ gold plating technology Development of electroless palladium/gold plating, which is expected to be applied to high-definition wire bonding-type BGA packaging, started in 2004 and market testing began in 2009. Packages used with smartphones, which require finer line space compared to flip chip packages, are currently being evaluated and certification is expected to be granted by 2010. (4) Electroless base metal plating technology We initially did not manufacture or sell base metal plating products. However, research into auto catalytic electroless tin plating started as a research theme for exploration in 2005, because no chemicals manufacturer has yet successfully developed the product. Starting in 2009, we have started asking a number of electronic parts manufacturers to evaluate the technology, in search also of possible areas of application. Our customers are currently conducting evaluations through trial and error. When the process is complete, the range of electronic parts that use our products is likely to widen.