Yaskawa Electric Corporation (YEC), a well-reputed Japan-based multinational company, was founded in 1915. Initially, the company used to produce different kinds of industrial automation processing electronic devices. However, in 1960 it diversified into electrical products, power products and industrial robots. It designs and manufactures products and incorporates Inverter Drives, Servos Drives, Machine Controllers, Spindle Drives and Robotic Products.
The company has branch offices in Europe, America and Asia. To coordinate and supervise its sales and service business in South East Asian countries it set up its regional office in Singapore in 1999, following which the office received a lot of queries about the company from Bangladesh. At that time the textile industries in Bangladesh were just beginning to flourish. A great number of automation products were used in this sector. The garment sector, in order to compete in the global market, needed to produce high quality garments in a short period of time. YEC found out that the machines that came to Bangladesh from outside were mostly YEC products, which were technologically very advanced and had longevity. However, these machines needed technical support within a few years. Then there was a need for purchasing other types of equipment. YEC acknowledged that although industries in Bangladesh were buying YEC products, they were not receiving after-sale service facilities in a comprehensive manner. For their part, the industries concerned in Bangladesh showed their interest to buy YEC products direct from the company. YEC realized if it could sell its products direct to its clients it would be able to penetrate further into the Bangladesh market, as well as benefiting its clients. These were the main reasons for YEC to come to Bangladesh, says Dr. Md. Sajjad Hossain, Southeast Technical Division Manager and the current Representative Manager of the Dhaka office of YEC.
Before he took up his present post in Bangladesh, Sajjad was the technical division manager at the regional office in Singapore and used to provide solutions to the company's clients, business partners and local agents. Since he is a Bangladeshi and has a vast knowledge about technical products, the authority decided to send him to Bangladesh.
In 2001, YEC conducted a survey to assess the market size, clients' demand and market share of its own products and those of its competitors in Bangladesh. While doing the market survey, the company found out that the textile industries in Bangladesh were growing considerably, particularly in spinning, knitting, dyeing and finishing sectors. The market survey revealed that alongside American, European, Chinese, Korean and other Japanese brands, YEC equipment was being consumed to a large extent by the Bangladeshi industries.
Having identified the demand for its products in the market, the company decided to appoint a local engineering firm as its agent, which would handle industrial automation business and have the capability to handle the technical products. Afterwards it appointed more agents that would import its products from overseas and have a stock of them. These agents went from door to door to sell the products.
Also, the company forged relationship with a group of industries or big conglomerates to do direct business with them. The advantage of doing business with big conglomerates is that they have infrastructure facilities; they can easily open L/C; they have their own transportation system and they get facilities from the government as well. The company's business activity was to guide local business partners and to provide technical support to the agents. Selling products has been completely supervised by the regional office since 2001.
Sajjad informs ET that there are mainly two specific areas for which there is a great demand for Yaskawa's products in Bangladesh: the industrial sector and the port where YEC products are used as container handling equipment control device unit. Inverter industrial machine drive products are used in all the industrial sectors in Bangladesh. Now YEC is the supplier of the drive unit of container handling crane at Chittagong seaport. This sophisticated crane is in operation to increase the efficiency of the handling system at the seaport.
YEC is a well-known manufacturer of the lift drive unit (heart of lift and elevator machine) i.e. inverter drive unit for lift control. The company began to supply lift drive units to Bangladesh only two years back. Now it has found a good market in the lift and elevator sector in the country. Many commercial and residential buildings and shopping complexes use lifts and elevators at their premises. Just in two years time the company captured about 50 per cent of the market share and now around 1000 lifts in Bangladesh are operated with YEC lift drive system.
Sajjad claims Yaskawa Electric has a market share of 25% in the industrial automation product category in the global market. Its industrial automation product incorporates industrial semiconductor, industrial robot, industrial motor etc. He further observes in 2001 Fuji Electric held 30 per cent and LG had 20 per cent of the total market share in the industrial sector whereas Yaskawa had only 5 percent of the market share. However, Fuji's market share is declining and now in 2007 it holds about 12% to 15% share. By contrast, Yaskawa currently holds 15% of the market share. The reason for this high performance of the company is, as Sajjad puts it, it had only 0.1% failure rate during the last five years. Fuji's market share has fallen because rather than selling Japanese-made machines Fuji is selling Chinese-made products that are cheaper. Moreover, consumers have to get them repaired within a short period of time after purchase. "For all this consumers' faith in our products has grown higher. Now YEC has a monopoly on lift drive unit business in Bangladesh."
The strategy of YEC, according to Sajjad, is to provide its clients with a total system based support like one stop service. Customers will just have to go to the web page and click on the brand name and will be able to have product information. Also, if clients face problems then they will only have to contact the parent company through website. The parent company will then notify the regional office and then the local office will contact the customers and provide technical support.
In case of industrial products, TVC and advertisements in newspapers are not effective, argues Sajjad. Since industrial clients are only using the product, promotional ads are put in industry-related journals such as BGMEA and BKMEA journals. Besides, YEC organizes seminars. For lift drive, the company invites local lift servicing companies, which provide local service and marketing.
Although the market in Bangladesh is expanding, Sajjad thinks there is an element of uncertainty in Bangladesh compared to other industrially developing countries, such as Malaysia and Thailand that have long-term visions for industrial development. These countries formulate plans that take into consideration how industrial sectors will grow even after thirty years. In Bangladesh most industrial developments have been made through the private sector and policymakers do not tend to make plans with long-term visions.
Since YEC products are based on industrial development, argues Sajjad, if industries develop, demand for YEC products will be augmented. He tells ET that if they do not find a long-term vision for industrial development in Bangladesh they are unlikely to access future demand and make a long-term business strategy.
For the time being, however, YEC intends to do business in a comprehensive manner in Bangladesh. It is planning to undertake a market survey of some sectors such as cement manufacturing and agro-based industries because it finds prospects for more industrial development in these sectors. It is also planning to open a branch office in Bangladesh very soon.
The import and export policy of Bangladesh creates difficulties in such areas as opening L/C, says Sajjad. Moreover, local agents do not keep a large volume of stock due to investment problem. In order to address this issue the company plans to open a local warehouse to build up a large stock so that customers can get its products instantly. Furthermore, the company intends to open up a service center with local expertise at the end of 2007.
Now products are made in Japan and all the inputs are from Japan and thus price is relatively high, says Sajjad. So the company may come up with a plan in future to assemble products in Bangladesh only for the Bangladesh market. If YEC can produce machines with Japanese technology and expertise and with local workers on the local land, it will be able to give customers its products in a shorter period of time and with a competitive price.
According to the YEC Representative Manager, most of the manufacturers such as Fuji, Toshiba, and Hitachi have only local agents in Bangladesh. Yaskawa is the only industrial automation manufacturer that has come into the Bangladesh market physically to assess market potential and is providing technical benefit and support to the local consumers.
In Bangladesh nobody can compete with Yaskawa in the lift drive sector, claims Sajjad, even though some Taiwanese and Korean brands sell their products in the market at cheaper price. If high quality lift drive is not used, it may cause an accident when the lift is being operated. Lift and elevator operators therefore have to depend on high quality and reliable lift drive and consumers have become aware of using high quality products for safety purpose. Since Yaskawa is producing high quality lift drive demand for its products is increasing.
In many industries in Bangladesh some 30 to 50 years old machines are still being used. Some of the machines are backdated or obsolete. Sajjad tells ET that YEC can give those machines a new life through a process of automatization.
ET Report by Ahmed Sharower Hossain
