What is "YAOKONTON," which realizes innovation in small factories?

Yao City, Osaka Prefecture, is home to numerous small factories. Innovation is now happening in this "town of manufacturing." Small factories, which primarily engaged in B2B transactions through made-to-order production, are now successively developing their own products. They are attracting attention both within and outside the city. These products are also featured as return gifts for Yao City's hometown tax program, and the city's hometown tax revenue has increased more than 20-fold in five years.

Accelerating Yao City's 'new manufacturing' is the 'YAOKONTON' Design Innovation Promotion Project, launched in 2022. Yao City, Kyoto University of the Arts, Dentsu Inc., and creators are working together to support the small factories' in-house product development from various angles.

In this article, Ikuno Goto from Yao City Hall, Takeshi Minamida from Minamida Co., Ltd., and Teppei Eguchi from Dentsu Inc.'s Marketing Bureau discuss the "YAOKONTON" initiative. Their insights on what is needed to develop local manufacturing should serve as a reference for municipalities and small-to-medium enterprises nationwide.

From left: Teppei Eguchi (Dentsu Inc.), Ikuno Goto (Yao City Hall), Takeshi Minamida (Minamida Co., Ltd.)

 

The pandemic made us keenly aware of the need to develop our own products

──First, please introduce yourselves.

Goto: I work in the Industrial Policy Division at Yao City Hall and have been involved in regional industrial promotion since 2013. I support manufacturing in Yao City from various angles, including corporate financing, startup support, and product PR.

Minamida: I serve as the Representative Director of Minamida Co., Ltd. Our company primarily manufactures metal parts for automobiles on a made-to-order basis, focusing mainly on B2B transactions. I have been involved with YAOKONTON since its inception in 2022.

Eguchi: I belong to Dentsu Inc.'s Marketing Bureau, where I assist companies with business development and handle projects focused on solving social issues. At YAOKONTON, I serve as a business producer and mentor.

──What kind of initiative is YAOKONTON?

Eguchi: Centered around Yao City Hall, Kyoto University of the Arts, and Dentsu Inc., it brings together various creators to support Yao City businesses in developing their own brands and new ventures. Activities are planned for a three-year period from 2022 to 2024.

YAOKONTON was named from the idea that "Yao, a town where the spirit of craftsmanship resides, possesses an unpredictable charm—a captivating chaos where anything could emerge." It goes beyond just product development, offering lectures on PR methods, crowdfunding, and utilizing hometown tax donations (return gifts). It provides a comprehensive platform where newly created products can be developed end-to-end, growing into pillars of business.

──Please tell us about the background behind the creation of YAOKONTON.

Goto: Yao City has about 11,000 businesses, with over a quarter being manufacturers. Most of these manufacturers are B2B companies, producing goods based on orders from large corporations and other clients. They face challenges like their brand being less visible to consumers and their sales being heavily influenced by their clients' performance. The economy is now facing a major turning point with issues like declining birthrates and aging populations, SDGs, and digitalization. The city administration has long felt a sense of crisis: unless companies move beyond relying solely on order-based production and start creating high-value-added products and developing their own sales channels, Yao City's manufacturing sector will decline.

Then the COVID-19 pandemic struck, bringing a wave of order cancellations that dealt a severe blow to Yao City's small factories. While B2B transactions halted, companies possessing direct channels to end consumers maintained their sales. Witnessing this situation reaffirmed the critical importance of diversifying sales channels and intensified the urgency to develop proprietary brands.

Minamida: The pandemic was truly devastating. Our company relies on automotive parts manufacturing for 90% of our sales. When global auto production halted, our sales plummeted nearly 70% at one point, leading to months of operating at a loss.

Goto: Yao City's tax revenue also plummeted during the pandemic. Witnessing the plight of small local factories, we proactively moved to implement support initiatives utilizing national grants and other funds. It was then that Dentsu Inc. proposed the concept and framework for YAOKONTON.

Eguchi: We had previously established a joint venture with Dentsu Inc. and Kyoto University of the Arts to support corporate business development. We thought that by adding Yao City to this, we could create a framework to provide a place where manufacturing could be practiced end-to-end.

Minamida: We also felt we needed to take action. That's when we heard about YAOKONTON starting in 2022. We already recognized the need for in-house product development. We wanted a second pillar alongside automotive parts manufacturing, to diversify risk between B2B and B2C, to communicate our technology clearly to the world, and to enhance our company's brand power. We joined with these various aspirations.

──What challenges do you perceive in manufacturing?

Minamida: Selling is harder than making. How do we showcase our technology to spark public interest? Communication is the most challenging part.

Eguchi: That's right. Even in product development, we often see cases where companies focus solely on their own technology when creating products. In B2C business, capturing consumers' explicit and latent needs is crucial.

It's relatively easy to come up with ideas. But there's a deep chasm between turning those ideas into tangible products and actually getting people to buy them. We believe Dentsu Inc., with its marketing and communication skills, can bridge that gap.

Goto: You're both absolutely right. Yao City also views the goal of manufacturing not as simply completing a product, but as getting that product sold. Since B2B companies are less visible to consumers, we see new products as a business card. We hope they help raise awareness of the company and increase its value.

 

Developing a coffee grinder to become "Japan's Peugeot"

──What kind of products is Minamida-san developing at YAOKONTON?

Minamida: Our company manufactures automotive screws, steering shafts, bolts for engine mounting, and nuts and metal parts supporting the chassis. During a technology inventory session with professors and students from Kyoto University of the Arts, we received the idea: "Couldn't we use our screw-making technology to create the teeth for a coffee grinder?"

Eguchi: What you're developing are the burrs for a "roll grinder," right? These burrs achieve high particle size uniformity and can grind large volumes. While roll grinders are common in industrial applications, adopting them for a household product would likely be a world first.

Minamida: Peugeot, the French automaker, was originally a company that made coffee grinders. That's why Professor Shigeyuki Kazama from Kyoto University of the Arts, who mentors YAOKONTON, told us, "Minamida, who makes automotive parts, should develop a coffee grinder and aim to become the Japanese Peugeot."

Goto: During development, Minamida visited coffee shops around town to gather insights about coffee. I often get asked by various shops, "When will Minamida's coffee grinder be ready?" It's also wonderful how they're involving local businesses and building a fan base.

Minamida: The demo unit is now complete. We're working with professors and students from Kinki University's Faculty of Science and Engineering to verify the conditions—like how finely the beans grind based on the spacing between the teeth and the applied force. Finely ground powder improves flavor consistency.

Minamida's coffee grinder development: Concept image (left) and prototype (right)

Eguchi: Alongside the coffee mill, you're also developing a smartphone stand, right?

Minamida: Yes. Prior to YAOKONTON, in 2023, we developed our first proprietary product: a "compact thawing plate" that utilizes aluminum's thermal conductivity to bring ingredients back to room temperature. Placing frozen meat or similar items on it allows for quick thawing.

The "Compact Thawing Plate" incorporates a "heat sink" component, which changes an object's temperature by dissipating (releasing) absorbed heat into the air. Creating this heat sink utilizes our core technology: "cold forging" (a technique compressing metal in a die to shape it).

One of our employees proposed using technologies like the "heat sink" and "cold forging" to create a smartphone stand, and we are currently working on this project.

──What sparked the development?

Minamida: It started when one of our employees was in a long-distance relationship and struggled with their smartphone overheating during long video calls. That's when we thought about using a heat sink to dissipate the phone's heat. We're collaborating with students from Kyoto University of the Arts to design the stand, considering angles for easy use even while lying down. We aim to release it within 2024.

The smartphone stand currently in development. The protruding part in the photo on the right is the "heat sink," created using "cold forging" technology.

──What are your impressions of collaborating with Kyoto University of the Arts students?

Minamida: Everyone has such rich creativity—truly impressive, as you'd expect from an art university. The quality of this smartphone stand is different from what we initially envisioned. They really prioritize the user perspective.

Eguchi: Just like our household roll grinder coffee mill, creating something truly unique in the world becomes a "business card" showcasing Minamida's high technical capabilities. That should be a source of pride for our employees. The smartphone stand serves as a tool to clearly communicate technologies like "heat sinks" and "cold forging" to the world. Creating "business cards" for B2B companies is also part of YAOKONTON's purpose. I'd be delighted if the products born here help more people learn about Minamida.

Actively promote products born from YAOKONTON

──What other products have been created at YAOKONTON?

Eguchi: Various products have been created, some of which are already on the market. One example is the "Watching You Tape" developed by Kikusui Tape. This unique product was conceived by Dentsu Inc.'s product development team "Specialist Mufu" and realized through Kikusui Tape's advanced technical capabilities. It's a security tape featuring a continuous print of 21 individual "eyes." It's applied to mailboxes, bike racks, or luggage to deter theft or prevent rough handling, appealing to the human psychology of feeling "watched."


──It's interesting that it's not just about designing eye photos, but about conveying a sense of "gaze."

Eguchi: Daiichi Sōgei, a fukusa (wrapping cloth) manufacturer, developed the "Watashi Mono Fukusa." Fukusa are traditionally used to wrap gift envelopes or condolence money, but their use has declined. While brainstorming new fukusa concepts, a female art director from Dentsu Inc. suggested an idea for a fukusa usable in daily life.

She shared a common frustration: when lending books or small items to friends, or passing down children's hand-me-downs, if you put them in a department store or sweets shop bag, the recipient might mistake it for a gift, thinking "something nice must be inside" at first glance.

That's when I conceived of a fukusa useful for lending and borrowing items. This product is inexpensive; you can hand it over along with the item, and the recipient can reuse it for someone else. It also incorporates an eco-friendly feature: if it gets dirty, it can be used as a dishcloth.


──It's fascinating to see such unique products emerging.

Goto: As more products emerge from YAOKONTON, we want to create effective PR opportunities for Yao City and support their distribution channels. As part of Yao City's manufacturing support, we've long prioritized product promotion.

For example, we've had displays at booths in Osaka City's Nakanoshima Library, on Kintetsu Railway trains, and at "QUESTION," a co-creation facility by Kyoto Shinkin Bank that supports startups. We also promoted products at the product fair during the Intercity Baseball Tournament held at Tokyo Dome. Additionally, products are displayed at "Kouba no Station WAO! YAO" inside Kintetsu Yao Station.

The "Miseru Bayao" venue where we're holding today's discussion serves as a hub for Yao City's manufacturing. It displays various products, hosts meetings for companies, and organizes events. These PR efforts have borne fruit. For instance, we received contact from Hands in Nagoya, leading to arrangements for them to sell products from Yao City companies. More people from other prefectures are visiting to see Yao's manufacturing, and we're also getting offers like, "Would you like to promote Yao City products at our place?"

Furthermore, from September 21 to October 14, 2024, an event titled "Yao's Small Factory Exhibition: Lifestyle Goods Crafted by Artisans" will be held at Hands Umeda Store.

Products from companies participating in YAOKONTON, including "Watching You Tape" and "My Own Fukusa," will be exhibited and sold.

https://umeda.hands.net/item/10f/post-1455534920.html

──You're putting a lot of effort into PR, aren't you?

Goto: At YAOKONTON, we also have lectures related to idea generation, communication, and PR strategy. Dentsu Inc.'s methodology is very helpful in those sessions.

Eguchi: For market development, we also utilize crowdfunding to gauge initial public reaction. We provide guidance on crafting crowdfunding pages and writing press releases, and support media exposure. Additionally, Kyoto University of the Arts runs numerous social implementation projects, so we sometimes introduce products through their network.

 

Furusato Tax Donations Surge Over 20-Fold in 5 Years!

──Please share your future outlook for manufacturing in Yao City.

Goto: While YAOKONTON is in its final year this year, we will continue to focus on supporting manufacturing in Yao City. YAOKONTON started in 2022 and has expanded the circle of participating companies. In the product development segment, 11 companies participated in Year 1, 10 in Year 2, and 8 in Year 3, totaling over 20 companies cumulatively. Including companies that only attended open seminars or refinement consultations, the total number is even higher. Among them, some companies reached commercialization in Year 1, while others, like Minamida, are developing products over the full three years. We provide tailored support to each company.

Eguchi: As Dentsu Inc., we have two main goals moving forward. First, although YAOKONTON concludes this year, we want to continue accompanying the product development projects currently underway until commercialization. We also aim to maintain our relationships with Yao City and the participating companies. Second, we want to support B2B companies and small factories across Japan in developing their own brands and new business ventures.

Minamida: We aim to launch our smartphone stand within this year and our coffee grinder by next year's Expo. Through YAOKONTON, we learned various things like PR methods, which we want to apply to our own business.

Goto: As a city, we also learned a lot through YAOKONTON—things like how to write press releases and communicate with the public. This knowledge will likely continue to be useful for promoting Yao City's manufacturing.

Eguchi: Yao City's manufacturing support initiatives, starting with YAOKONTON, are starting to bear fruit in various areas. For example, the "Design White Paper 2024," supervised by the Design Policy Office of the Ministry of Economy, Trade and Industry, featured YAOKONTON's industry-government-academia collaboration efforts. In the "Monodzukuri Japan Awards," jointly organized by the Ministry of Economy, Trade and Industry, the Ministry of Land, Infrastructure, Transport and Tourism, the Ministry of Health, Labour and Welfare, and the Ministry of Education, Culture, Sports, Science and Technology, nine companies from Yao City were selected as top manufacturing companies among local governments nationwide.

Goto: Approximately half of the companies participating in YAOKONTON will exhibit in the "Exhibition Zone" within the Osaka Healthcare Pavilion at the 2025 Osaka-Kansai Expo from September 16th to 22nd.

In Yao City, the amount of hometown tax donations grew significantly from 70 million yen in 2019 to approximately 1.7 billion yen in 2023. One factor is the inclusion of numerous return gifts featuring products from small local factories. YAOKONTON has served as a catalyst for expanding this product lineup, and we hope these products will reach people nationwide.

Yao City also hosts events like factory tours. We aim to further develop Yao's manufacturing sector through projects like YAOKONTON.

──Hearing your story, it's clear that the city and small factories are working together, not just on product development but on various initiatives. The results are evident, such as the increase in hometown tax donations, and this seems highly instructive for manufacturing in other regions as well. Thank you very much for today.