Kokuyo Co., Ltd.

6-1-1 Oimazato-Minami
Higashinari-ku
Osaka, 537-8686
Japan
Telephone: (+81 6) 6976-1221
Web site: http://www.kokuyo.com

Public Company
Founded:
1905
Employees: 6,596
Sales: ¥315.62 billion ($2.8 billion) (2017)
Stock Exchanges: Tokyo
Ticker Symbol: 7984
NAICS: 322230 Stationery Product Manufacturing; 337214 Office Furniture (except Wood) Manufacturing

Kokuyo Co., Ltd., is a major Japanese manufacturer focused on three complementary business divisions: Stationery, Furniture, and Online and Catalog Sales and Retail. The Stationery division is the company's original business, and includes the company's production of office paper products and other stationery and office supply, sales promotion, and related products. This division also includes the development and production of picture books, educational toys, and other educational products. Kokuyo's Stationery division operates on an international basis, with production and sales subsidiaries in China, India, Thailand, and Vietnam. Kokuyo's Furniture division focuses on the production of office furniture and furniture for public spaces. It also provides office and space configuration services for corporate offices; showrooms; museums; stadiums; and educational, governmental, and other public facilities, as well as medical facilities, retail and commercial locations, and hotels.

Lastly, the company's Online and Catalog Sales and Retail division operates mail-order office supply businesses, including Kaunet in Japan, Easy Buy in China, and Actus in Europe. This division also includes a wholesale business supplying office supplies, office and office automation equipment, school supplies, and office furniture. Headquartered in Osaka, Kokuyo is led by president and CEO Hidekuni Kuroda, great-grandson of the company founder Zentaro Kuroda.

FROM LEDGER COVERS TO STATIONERY LEADER: 1905

Zentaro Kuroda was a native of a small village in Etchu Province, which later became Toyama Prefecture. At the age of 19, Kuroda left home to find work in Osaka. In 1905, when Kuroda was 26 years old, he founded his own business, a small shop producing covers for traditional Japanese account ledgers, known as wacho. Kuroda's business, located in Minami-Horie, Nishi-ku, Osaka, was called, appropriately enough, Kuroda Hyoshi-ten (Kuroda Cover Shop).

COMPANY PERSPECTIVES

Our corporate philosophy of enriching the world through our products has remained unchanged since we were founded. We have been promoting our day-to-day business by supporting the growth of our customers (individuals and companies) through our products and services so as to enrich society. In recent years, however, societal values have diversified and the growth of people and companies has come to take on varied forms. In order to achieve sustainable growth even as it becomes more difficult to determine what it means to enrich the world, we are presently engaged in efforts to undertake management reforms for rebuilding a foundation for management and business.

A more important development came in 1908, when Kuroda expanded his business to include the production of the entire wacho account ledger. Although this activity placed Kuroda in head-to-head competition with more well-established competitors, Kuroda's willingness to innovate enabled him to establish himself among the local leaders. For one, Kuroda recognized that, as the Japanese traded their traditional brushes for ink pens, the paper used in the ledgers would have to be adapted as well. Kuroda turned to a local paper manufacturer to develop a heavyweight paper with a smoother surface to accommodate the finer nibs of ink pens.

Kuroda also spotted an opportunity in the drive to persuade Japanese business to abandon Japanese-style accounting methods in favor of the Western-style double-entry bookkeeping system. Even though Japanese businesses were slow to complete the transition, Kuroda recognized that the Western accounting system would eventually become established as the norm in Japan. In preparation for this, in 1913 Kuroda became one of the first in Japan to begin producing Western-style ledgers. At the same time, Kuroda converted his own company's accounting system to the double-entry system, then used this experience to expand the company's production to encompass a variety of other office paper products, including vouchers, invoices, and writing papers. By 1914 Kuroda already had 60 employees.

KOKUYO BRAND: 1917

Kuroda developed a number of successful products throughout the decade, including its first stationery pads in 1914 and the introduction of the company's Shokansen “letter paper,” featuring paper developed by the company in partnership with another paper manufacturer. In the meantime, the sales of the company's Western-style ledgers had taken off, permitting the company to shift production of this product to a dedicated factory in 1917.

In that year, Kuroda introduced the company's brand name and trademark, Kokuyo. The name and its incorporation of the Japanese word yo (honor) referred to Kuroda's promise to bring honor to his hometown when he first left home. Kuroda made good on this promise, expanding the company as the leading supplier of ledgers and other paper office supplies in western Japan in the post–World War I period.

Japan relied primarily on imports of ledger paper from England for its supply. During the 1920s Kokuyo began working with leading Japanese paper producer Oji to develop a process for manufacturing its own ledger paper. This project became successful in 1930, with the launch of the Kokuyo ledger paper, the first to be produced in Japan. Two years later, in response to consumer demand, the company introduced Japan's first colored writing paper as well. During this time, the company also built up its sales network, which comprised groups of wholesalers and retailers close aligned with, but financially separate from, the company. In this way, Kokuyo was able to achieve national distribution of its growing product line.

Kokuyo had added another factory, the Ikaino plant, also dedicated to the production and printing of Western-style account ledgers in 1922. The company's rising sales had led it to add a third factory, in Nakamichi, in 1927. In 1936 the company moved to new headquarters, which also added production space, in Osaka's Imazato district. In that year, the company also began producing carbon duplication account ledgers. With the outbreak of the Second Sino-Japanese War in 1937, Kokuyo took advantage of Japan's occupation of China and much of Southeast Asia, setting up subsidiaries in China and Indonesia. The company's Imazato plant was converted to supporting the Japanese military effort, producing army account ledgers, government printed materials, and other products used by the army.

FURNITURE ENTRY: 1960

KEY DATES
1905:
Zentaro Kuroda founds a company to make covers for Japanese-style ledgers.
1917:
The company introduces the Kokuyo brand name.
1960:
Kokuyo launches production of office furniture.
1993:
The company begins international expansion.
2018:
Kokuyo's Thai joint venture opens its first showroom in Bangkok.

The introduction of a new product, flat files, in 1956 paved the way for Kokuyo's expansion into a second major business line. In 1960 the company introduced its first piece of office furniture, a steel filing cabinet. This was soon followed by a line of other steelbased office products, which the company began manufacturing at a new dedicated factory, the Yao plant, opened in 1961. By 1966 the company had added the production of office swivel chairs and folding chairs, as well as filing cabinets for home use. These were followed by the production of desks and other steel furniture. Backed by the success of the steel products division, the company built a second factory, which included the first Japanese-designed automated production system, in Kashiwara, which opened in 1971.

In the meantime, the company had carried out a major modernization program at its other plants, importing an automated production system developed by Bielomatik in Germany. Installation and fine-tuning of the cutting-edge equipment was completed in 1962, placing Kokuyo among the ranks of the world's most modern paper products producers.

The company's modernization drive continued into the end of the decade, with the construction of a new headquarters building in 1969. The new building became one of the first “live” showrooms, in that it was equipped almost exclusively with the Kokuyo range of office supplies and furniture, allowing visitors to see the company's products being used in actual office conditions.

PUBLIC OFFERING: 1972

Kokuyo continued to roll out new popular products as well. These included a rugged survey field notebook, launched in 1959, which became popular among birdwatchers, hikers, and other outdoor enthusiasts. In 1961 the company introduced its own loose-leaf binders, and in 1965 Kokuyo debuted the first of its successful line of Campus Notebooks. In 1970 the company also began importing the Pritt glue stick, developed by Germany's Henkel. In 1973 the company acquired the license to produce and distribute the Pritt brand in Japan. Kokuyo later extended the glue stick's convenience with the development of a glue tape.

As its sales reached ¥50 billion for the first time, Kokuyo went public, listing its shares on the Tokyo and Osaka Stock Exchanges in 1973. The decade became one of significant growth for the company, as its sales, driven by its successful furniture line as well as by the steadily increasing demand for office supply products, topped ¥100 billion by 1979. In that year, the company completed construction of a new office building in the Shinagawa ward in Tokyo. This was followed by the opening of a Tokyo showroom in 1982.

Kokuyo continued to roll out new products, particularly in its furniture line. New products included the highly popular KuruKuruMeka children's study desk, which could be easily raised to accommodate a child's growth, introduced in 1981. The company's office furniture lineup grew as well, with the additions of the Biotech line of office swivel chairs and the FS file box, both in 1983.

Kokuyo also began developing a more scientific interest in office furniture and office space design, establishing its own office research center in 1996. This interest later led the company to embrace the “universal design” (UD) concepts that had begun emerging in the 1980s. Kokuyo established its own 10-point list of UD principles, and introduced its own UD logo in 1999, releasing the first product, a clear file folder called the Wavelet, under the logo that same year. Kokuyo also expanded its business to include the provision of office design services.

INTERNATIONAL EXPANSION

Much of this development took place under the leadership of the next generation of the Kuroda family, starting with Yasunosuke Kuroda, who took over from his father as company president in 1985, and then Akihiro Kuroda, who became company president in 1989. Kokuyo achieved impressive growth during this time, topping ¥200 billion in sales in 1988, and then ¥300 billion just three years later.

Having ensured its leadership in the Japanese market, Kokuyo relaunched its international expansion, starting with the opening of a representative office in Germany in 1993. This was followed by an office in Hong Kong in 1995. In order to counteract the strength of the yen, the company also started building an international manufacturing network, starting with a sales joint venture in Thailand in 1996. That company grew into Thailand's leading supplier of Japanese-designed office furniture. This was followed by a production facility in Malaysia in 1997. The Malaysian factory included dedicated plants for the group's stationery and furniture lines, and began supplying Kokuyo's export markets.

The company continued to invest in its Japanese production, opening its Mie plant in 1993 for the production of steel desks, and a factory in Shibayama, producing flooring and other building materials. Nonetheless, Kokuyo was forced to respond to the realities of postrecession Japan, as the country's postwar economic boom came to an abrupt end at the start of the 1990s. The company began exploring new distribution channels, starting with the launch of its Benri Net online office-supplies ordering system in 1997. In 1998 the company established its first mail-order operation, called@office, targeting the wholesale sector. This was followed in 2001 by the launch of Kaunet, focused on providing online mail-order catalog services to the small office and home office sector.

Nonetheless, amid Japan's declining demographics, Kokuyo set its sights on new horizons. In 2002 the company founded a new subsidiary, Kokuyo International Asia Co., based in Hong Kong, in order to develop sales of the company's products in Hong Kong and mainland China. This subsidiary was followed by a dedicated Chinese-based subsidiary, Kokuyo Trading (Shanghai) Co., founded in 2003. The company initially focused on providing building and office design services to Japanese companies entering Shanghai and other Chinese markets. In 2005 the company launched a stationery and office supply mail-order business in China, called Easy Buy, as well. This was followed by the launch of the company's furniture division in China, with the establishment of Kokuyo Furniture Commerce and Trading (Shanghai) Co., Ltd. in 2006.

INDIA ENTRY: 2011

Kokuyo put into place another piece of its international sales and manufacturing network, setting up Kokuyo Vietnam in 2005. The company then opened a manufacturing facility in that country as well, in 2006. Back in Japan, meanwhile, the company expanded its range of operations, adding the production and sale of educational toys, books, and other products, and acquiring Urban Design System Co., Ltd., in 2009 in order to add that company's hotel and commercial facility design and consulting business.

In response to the global economic crisis, the company carried out a restructuring of its operations in 2010. This process included the streamlining of its sales subsidiaries into a single company, Kokuyo Marketing Co., Ltd. The company also merged its furniture and office systems operations into Kokuyo Furniture Co.

The company continued, however, to broaden its international reach. In 2010 Kokuyo formed an alliance with Pentel Co., Ltd., in order to distribute its stationery products to Europe and Russia, as well as to the Middle East and Africa. In 2011 the company made an entry into India, acquiring a 30 percent stake in publicly listed Camlin Ltd., one of that country's office supply leaders. Kokuyo then acquired an additional 20.3 percent in the Indian company, which changed its name to Kokuyo Camlin. Kokuyo followed up this purchase with the acquisition of the Mumbai-based notebook producer Riddhi Enterprises, for $8 million in 2013. The company then moved to raise its stake in Kokuyo Camlin, launching a buyout offer in late 2015. Kokuyo Camlin nonetheless retained its listing on the Bombay Stock Exchange.

Kokuyo saw success in its other international operations as well. The company's Thailand joint venture had initially focused on the business-to-business segment since its creation. In response to the growth of the home office market in Thailand, the joint venture took its first step into the business-to-consumer market, opening a 250-square-meter showroom in Bangkok's CentralWorld shopping complex in 2018.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Iwami Paper Industry Co., Ltd.; Kokuyo Camlin Ltd. (India); Kokuyo Commerce (Shanghai) Co. Ltd. (China); Kokuyo Design Consultants (Shanghai) Ltd. (China); Kokuyo Engineering & Technology Co., Ltd.; Kokuyo Furniture (China) Co., Ltd.; Kokuyo International (Malaysia) Sdn. Bhd.; Kokuyo MVP Co., Ltd.; Kokuyo Product Shiga Co., Ltd.; Kokuyo Vietnam Co., Ltd.; Kokuyo Vietnam Trading Co., Ltd.; Kokuyo-Ik (Thailand) Co., Ltd.; Kokuyo International (Thailand) Co., Ltd.; S&T Logistics (Shanghai) Co., Ltd. (China); Wilkhahn Japan Co., Ltd.; Kokuyo Supply Logistics Co., Ltd.; Kokuyo Riddhi Paper Products Private Ltd. (India).

PRINCIPAL DIVISIONS

Furniture; Online and Catalog Sales and Retail; Stationery.

PRINCIPAL COMPETITORS

Imura Envelope Co., Ltd.; Mitsubishi Pencil Company Ltd.; Nippon Paper Crecia Co., Ltd.; NP Trading Co., Ltd.; Oji Holdings Corporation; Pilot Corporation; Sekisei Co., Ltd.

FURTHER READING

Agrawal, Shrija. “Japan's Kokuyo to Acquire Majority Stake in Stationery Maker Camlin.” VCCircle, August 16, 2016. Accessed July 20, 2018. https://www.vccircle.com/japan%C2%92s-kokuyo-acquire-majority-stake-stationery-maker-camlin .

Dutta, Diksha. “Kokuyo Camlin Sells Pre-school Chain Alpha Kids to Camlin Founders.” VCCircle, March 20, 2014. Accessed July 20, 2018. https://www.vccircle.com/kokuyo-camlin-sells-pre-school-chain-alpha-kids-camlin-founders/ .

“Japan's Kokuyo to Start Marketing Stationery in Vietnam.” AsiaPulse News, January 28, 2010.

“Kokuyo Camlin Informs about Business Updates.” Accord Fintech, October 1, 2015.

“Kokuyo Enters Indian Paper Notebook Sector, Acquires Riddhi Enterprises.” VCCircle, December 9, 2013. Accessed July 20, 2018. https://www.vccircle.com/kokuyo-enters-indian-paper-notebook-sector-acquires-riddhi-enterprises/ .

“Kokuyo Rolls Out ‘te.to.te’ iPad Application.” Professional Services Close-Up, June 16, 2012.

Rungfapaisarn, Kwanchai. “Expanding Kokuyo Branches into B2C Segment.” Nation (Thailand), March 31, 2018.