Japanese precious metal materials manufacturer TANAKA Precious Metals has a history spanning almost 140 years and, since its establishment in 1885, has grown to become an international provider of precious metal solutions to a wide range of industries. The company’s diversified business portfolio ranges from products for the electronics, semiconductor and automotive industries to the supply of precious metals in the form of jewelry and resources. J-BIG spoke to Shingo Suzuki, Managing Director of TANAKA Kikinzoku International (Europe) GmbH, and Natalie Abe, General Manager of the Corporate Communications & Advertising Department of TANAKA Holdings Co., Ltd. (THD), about how the company became an expert in precious metal solutions, its entry into the European market, the workflow between Germany and Japan and its future plans.
J-BIG: Please tell us more about the start of the company and how it developed in the early days?
Natalie Abe: TANAKA Precious Metals was founded in 1885, which means that next year we will be celebrating our 140th anniversary. Today we are a precious metals company mainly focused on industrial applications as well as asset, but in our early days TANAKA started out in the financial services sector. Our founder, Umekichi Tanaka, started his business at a young age, in his early 30s. As a teenager, he worked as an apprentice in a pawnbroker’s shop, and after several years of training, he became a fully independent businessman and set up a money exchange service under the name Ejimaya TANAKA Shoten. The business involved exchanging notes for coins and charging a fee for the service. Back then the company was still a small shop in Kayabacho, Nihonbashi, Tokyo.
In fact, Umekichi Tanaka was a good friend of a very famous banker in Japan at the time, Zenjiro Yasuda, whose bank merged with two other major financial institutions to form Mizuho Corporation, now known as Mizuho Bank (Mizuho Bank J-BIG interview). Surely this connection was one of the reasons why he started out in the financial sector.
J-BIG: How did the money exchange service evolve into an industrial precious metals business?
Natalie Abe: In 1885, during the Meiji era, large amounts of gold and silver were traded in the financial sector. As silver was the currency of the time, our founder was already familiar with this type of material, and the company began trading in bullion, melting down foreign currency from Yokohama’s foreign quarter, refining it and selling the metal. The techniques developed at that time played an important role in our later industrial use of precious metals.
A few years after the company was established, TANAKA Shoten received a request from neighbouring Tokyo Dento K.K., Japan’s first electric power company, to process used light bulbs. The bulbs contained platinum filaments. Umekichi Tanaka began to dissolve the material and tried to melt it down. He succeeded in recovering the platinum from the spent filament and this marked the first stage of his industrial business.
J-BIG: How did the company evolve from there?
Natalie Abe: The most significant change for our business came shortly after the Second World War, when the telephone relay was replaced by a crossbar switching contact. Previously, telephone operators were responsible for changing telephone numbers manually. However, NTT (Nippon Telegraph and Telephone), the Japanese public telephone company, tried to introduce an automatic process. The key components for the transition from manual to automatic connection are the switching contacts, which are mainly made of silver. At the time, it was a challenge to produce large quantities of this particular type of contact. Working with NTT, our engineers overcame this challenge and succeeded in producing large quantities of silver contacts. The product was launched in 1955.
Shingo Suzuki: The silver contacts proved to be a very successful product and an important mass-produced item in TANAKA’s history, transforming our company into a major player. Before that, TANAKA was the 5th or 6th largest precious metal company in Japan. However, after we invented the crossbar contact for the telecommunications industry, we became the industry leader.
Natalie Abe: Then, as the semiconductor industry experienced rapid growth with the rise of consumer electronics in Japan, TANAKA sought to further develop its technical capabilities for the semiconductor business. The Ministry of International Trade and Industry (now METI) requested that TANAKA Kikinzoku Kogyo develop a bonding wire with a diameter of 10 microns (micrometers). Although platinum wire with a diameter of 10 microns had been successfully produced in Japan, the finest gold wire was 25 microns in diameter. The company succeeded in producing ultra-fine gold wire in 1964. Today, TANAKA still has the largest market share in the semiconductor bonding wire market due to its expertise in refining and processing high-purity gold for this application.
TANAKA first developed the gold bonding wire used in semiconductors domestically, but after that there were civil customers in Asia, in Singapore, Malaysia and Thailand and other Asian areas. This led to the establishment of production facilities in Southeast Asia to better serve local customers and meet growing demand more efficiently. Thus, from the 1960s onwards, the company expanded its local business in Asia.
J-BIG: Were these your first steps towards an international business?
Natalie Abe: Before we already sourced precious metals from overseas, including platinum, palladium and rhodium. TANAKA was the sole agent responsible for sourcing palladium and PGA (polyglycolic acid) materials from Russia and had some communication with overseas countries, including mining companies in South Africa and Russia. However, we did not yet have an international sales operation.
Shingo Suzuki: Our internationalization began in Asia, with Taiwan being the first focus, as many semiconductor companies in Japan set up a factory in Taiwan because of the low labor costs. We needed a local sales office in Taiwan to facilitate closer communication with our operations in the region, which we established in 1986. Now our branch offices in Asia expands in Taiwan, China, Korea, Singapore, Malaysia, Thailand, Philippine and India.
J-BIG: When did you come to Europe?
Shingo Suzuki: We set up a sales office in Europe and the United States as a liaison office in the 1990s. From the outset our European office has been based in Frankfurt, Germany. One of the main advantages of having an office in Frankfurt is the ability to fly directly to overseas countries in Europe and North Africa. It also provides access to the United States, with connections from Frankfurt to Chicago, New York and London.
Our main product offering to the German market was our range of automotive components. Precious Metals products used in the automotive industry include electrical contacts for relays and silver wire contact materials used in micro-motors. Micro-motors are used for electric windows and mirrors, as well as air conditioning flaps. At that time, there was already a high demand for sensors and electrical contact materials for internal combustion engines.
J-BIG: How has business developed in Europe over the last 30 years?
Shingo Suzuki: When we first came to Europe, we had a maximum of about five or ten employees. Since then we have grown steadily and in the last three or four years the average number of employees has increased from 20 to 25 and is now close to 30.
In terms of our product portfolio, we are always looking ahead and adapting to changes in the market. Strict regulations on CO2 emissions in Europe are driving many industries to use clean energy instead of fossil fuels. The current trend in clean energy is towards hydrogen, and our catalyst materials for fuel cells and electrolyzers are precious metal compounds used in the electronics of these hydrogen energy applications. Sales of these applications are now growing.
At the same time we are looking for more new business opportunities as demand for some materials for the internal combustion engine is declining. We are currently exploring opportunities in the pharmaceutical industry, particularly in the area of disease detection kits, such as those used for Influenza and COVID-19. Following the COVID pandemic, consumer demand for disease testing products has increased. Gold nano particle is a key material for disease detection kit and we have developed our technologies in the medical industry as well.
J-BIG: How is TANAKA positioned globally and what is the role of TANAKA Kikinzoku International (Europe) GmbH?
Natalie Abe: We currently employ 5,355 people and have offices in eight countries, with a strong presence in Asia. Our main business is in advanced materials for industrial use, following by procurement, personal assets and jewelry. The synergy of the various businesses both B2B and B2C in the precious metals industry is our strength and competitive advantage. Sales for the last two years totaled 611 billion Japanese yen, or about 5 billion euros. We estimate that about 10% of the total comes from Europe.
Our European office plays an important role in both the electronic and medical sectors. It is important that we expand our industrial sectors and attract new customers, and R&D is a crucial aspect of this process. Germany is an important market from an R&D perspective. Many leading companies have an R&D department in Germany. This provides an excellent opportunity to gain insight into new technologies and identify potential ways to expand our market reach. There are still many opportunities for the industrial use of precious metals not only in the electrical sector but also in the medical sector.
J-BIG: How do the European office and the Japanese headquarters work together?
Shingo Suzuki: We work closely with our R&D team in Japan to find the best solutions to customer challenges, taking into account market differences. Our competitors in Europe, which include Johnson Matthey, Umicore and Heraeus, are all headquartered in Europe and have operations in Germany and the UK. They have the advantage of an efficient exchange of information between the salesperson and the team. Our customers are sometimes concerned about the time it takes to get feedback, and our competitors are often able to respond more quickly than we can. We’re working to overcome this by improving our feedback system to our team in Japan. Of course, the quality of our products remains our top priority, but we need to reduce the time taken for certain processes. Hiring additional local staff and localizing processes will facilitate more effective communication.
As our R&D team in Germany becomes stronger and more important to the Japanese headquarters, we can expect existing problems to be solved and innovation to be driven forward. There is infinite potential for precious metals to be used in applications such as clean energy, recycling, nanotechnology, biotechnology and other clean environmental technologies that have come to the spotlight in recent years, and the European market will play an important role in our future business.
J-BIG: What about cultural differences? Would you consider it a challenge for a Japanese company to operate in the German market?
Shingo Suzuki: I think there is a certain common mindset between the German and Japanese people that makes it easy for a Japanese company to come to Germany. During my visits and meetings with German customers and technical engineers, they always emphasize the importance of quality. That’s very similar to the Japanese way of thinking. German companies are seen as reliable and trustworthy, and the products they develop are built to last – that’s the same philosophy we have. Sharing the same values in the industry, German companies are good partners to us.
Addressing the challenges: Compared to other nationalities, such as Americans, Germans tend to be more reserved. Sometimes they are less forthcoming than you might expect and tend to avoid discussing matters that are not directly relevant to the main issue at hand. This is why it is important to establish a good foundation of trust.
Finally, we face the same problems as many companies in finding people with the right skills for our business. As a Japanese company, we are not as well known in Europe and highly skilled people tend to go to companies they already know.
J-BIG: What are your goals for the European office?
Shingo Suzuki: Our medium-term goal is to establish a productive collaboration with our sister company in Switzerland, Metalor, which we acquired in 2016. By having more regular discussions with them, we want to gain a deeper understanding of each other’s perspectives and determine which products and responsibilities should be allocated to the offices in a logical way. Some products need to be handled by the sister company because they have advantages as a European company.
With almost 40 years’ experience in Europe, we have a deep understanding of our customers’ locations and markets. However, this only applies to the old products, not the future market. Our first priority for the future of the European office is to identify new customers in new industries.
J-BIG: Which industries do you specifically have in mind?
Shingo Suzuki: Our current focus is on the clean energy and medical industries. Regarding the clean energy, platinum and other precious metals performs as catalyst in a variety of energy solution. We’ve had lots of inquiries on them from European market. In addition, disease detection kits is highly required these days. Currently, we’re trying to find customers in the field of zoster virus (VZV) detection as well as Influenza and COVID-19. Our technology of controlling gold nanoparticle contributes to high performance of these detection kids.
J-BIG: How do you see TANAKA’s future in Germany?
Shingo Suzuki: For certain products it is essential to have local manufacturing in Switzerland or Germany. By partnering with Metalor, we can significantly increase our sales in Europe. This collaboration will not only increase sales, but also streamline production, which is a long-term goal. Another of my goals is to offer a one-stop service in Europe and the United States in the future, providing convenience and efficiency to our customers by offering multiple services in one location.
Natalie Abe: We intend to expand our business globally. In addition to Asia, our production and recycling operations will be established in Europe and the United States. We will continue to offer the highest quality with our traditional and innovative technologies by realising the full potential in fundamental areas such as precious metal recycling, refining and assaying technologies.
