Siemens in Japan

In the Land of the Rising Sun  

Siemens in Japan

In 1887, the “Telegraph Construction Company of Siemens & Halske” sent engineer Hermann Kessler to Japan. The Siemens office he opened in Tokyo just two weeks after his arrival was the electrical equipment firm’s first outpost in Asia. But even into the early 1950s, it was not always smooth going as the one-man Tokyo office evolved into the flourishing Japanese Siemens Group, which today has a workforce of more than 2,200 employees.

Off to East Asia – Making the first trade connections 

In the mid-19th century, Japan abandoned the seclusion from the outside world that it had maintained for more than two centuries, and the island nation in the Pacific became one of the destinations of the Prussian East Asia Expedition of 1860/1861. 

 

To speed up the extremely sluggish negotiations on a trade treaty, the mission’s head, Count Friedrich Albrecht Graf zu Eulenburg, presented technology from Siemens & Halske (S&H): “I will now have some electromagnetic telegraphs unpacked, which perhaps will touch the hearts of the Japanese.”

 

His expectations did not pan out right away – the treaty was not signed for another two months, finally allowing the delegation to continue on its travels. They left two railroad telegraphs behind as a departing gift for the Emperor. 

 

 

Ten years later, Japan initiated extensive reforms that would enable the country to step into the modern world. And S&H hoped to expand its foreign activities: 

I have just made an arrangement with a well-known company in Düsseldorf […] that does extensive business in Japan […] by which we plan to make a joint-account deal for telegraph installations in Japan. 
Werner von Siemens, 1870

Yet export deliveries remained sporadic, and by 1879 the company founder was forced to acknowledge that the contract with the trading firm on the Rhine had not yielded any permanent connections. In the mid-1880s, S&H began intensifying its efforts to get a foothold in the Japanese market. First it sent out engineer Otto Henneberg to handle technical customer service on location, to make connections with trading firms, leading representatives of Japanese industry and high-ranking politicians, and to think up electrification projects.

 

In 1886 an agency agreement was then signed with a trading company named C. Rohe & Co., which had offices in Hamburg, Yokohama and Tokyo; it was given an exclusive deal to sell electrical and lighting equipment. Otto Henneberg left Japan just a brief time later, in 1887, and was succeeded by S&H engineer Hermann Kessler – only 27 years old, and bearing the responsibility for all business in East Asia. 

Japan becomes a second home – A Siemens engineer guides business on location for 20 years

 

Hermann Kessler arrived in Japan in mid-July 1887. On August 1, he opened an office in Tokyo, and by late summer that same year he had already expanded upon Otto Henneberg’s incipient contact with the Japanese mining company Furukawa, which would eventually become one of the electric equipment firm’s most important customers and partners. 

 

When S&H reorganized its sales activities, and headquarters found itself at odds in various ways with Kessler, on the one hand, and the C. Rohde & Co. trading company, on the other, the agency agreement was terminated. It was a turning point. From January 1, 1893, onward, the German electrical equipment company would be represented instead by the Tokyo-based “Siemens & Halske, Japan Agency.” Kessler was in charge of its technical management, and also its commercial management at first. 

 

The office’s achievements were noteworthy. Even though Japan went into an economic recession around the turn of the century, the Japan agency acquired several orders for major projects like delivering all the electrical equipment for the Enoshima railway near Tokyo in 1899, and for the state-owned Yahata steel mill, which went into operation in 1901. The company also took part in electrifying the Kobu railway between Iidamachi and Nakano, delivering transformers and three-phase current generators.

Since S&H had primarily been supplying projects for high-voltage systems anyway, when Siemens-Schuckertwerke was founded in 1903 the Japan agency was renamed “Siemens-Schuckertwerke, Tokyo Technical Office.” Two years later, the Technical Office was reestablished as a stock corporation, “Siemens-Schuckert Denki Kabushiki Kaisha” (SSDKK). Its business reach expanded. The SSW subsidiary was now responsible not just for Japan, but also for Formosa (Taiwan), Korea and southern Manchuria, and founded additional sales offices.

 

Hermann Kessler headed SSDKK until 1907, after which he returned to Germany and took charge of the Japan business within the “Central Overseas Administration.” In that capacity, he repeatedly traveled back to his old territory over the subsequent years, reinforcing business relationships as a broker, and assisting with in-country negotiations and construction projects. 

Disappointed expectations – The Japan business in a time of crisis 

Although SSDKK had a very good distribution network compared to its foreign competition, the Japanese market was mainly dominated by American and British companies – and increasingly, from 1910 onwards, also by the German Allgemeine Elektrizitätsgesellschaft (AEG). 

 

 SSW and S&H products still had a low market share, ultimately resulting in red ink. As a result the head of the Overseas Administration, Carl Friedrich von Siemens, found that “our worst fears about the Tokyo business were not at all too pessimistic.” He warned that it was “urgently necessary to take steps immediately to avert a further shrinkage of our influence there.”  

 

Plans called for responding to competition from the gradually rising Japanese electrical equipment industry by establishing joint ventures, which offered such advantages as avoiding import duties and making it possible to produce more economically on location, at local wage rates. But this project failed for two reasons. One was what was known as the “Navy Affair,” which damaged the reputation of Siemens, and the other was the outbreak of World War I, during which trade relations between the two countries almost collapsed: under pressure from its British ally, Japan prohibited business activity by SSDKK. Consequently, almost all technical offices and sales offices were shut down – only the Tokyo office remained. The workshop in Kobe had to cease operations as well; it had been founded in 1909 and at first only did repair and assembly work, before starting primarily to make accessory parts on a modest scale. 

A joint venture – Siemens joins forces with Japanese companies 

In 1919, SSDKK was allowed to resume sales operations. That same year, with a significant involvement of Hermann Kessler, S&H and SSW began reviving their project to form joint ventures – plans that had necessarily been shelved because of the war. 

 

The associated negotiations with Furukawa, whose holdings included a cable plant in Yokohama, and which enjoyed a favored position because of its long-standing contacts with Siemens, continued for several years. They repeatedly threatened to collapse, but finally concluded on August 22, 1923, with the founding of the Fusi Denki Seizó Kabushiki Kaisha (Fusi Denki) stock company – where Fusi stood for Furukama and Siemens. 

 

The company suffered from massive capital and liquidity problems at first, which were not resolved until Siemens carried out a bond issue in the summer of 1927. The founding of Fusi Denki went hand in hand with a bitter loss of significance for SSDKK, which had to relinquish assets like its technical offices, staff and most sales activities to the new venture. 

 

Even as the negotiations for the joint venture were still in progress, headquarters started construction on a factory in Kawasaki that would make such products as electrical machines, motors, transformers, switchgear, installation materials, meters, spotlights and block signaling systems. When a severe earthquake destroyed almost all the machinery, the start of production, originally planned for 1923, had to be postponed for two years. 

 

Late in the 1920s a systematic expansion of the production range began; production on weak-current products like loading coils and automated telephone systems began at a new plant in Kawasaki in 1933. Two years after that, Fusi Denki spun off its weak-current equipment department to a separate telecommunications equipment company named Fusi Tsushinki Seizo Kabushiki Kaisha (Fusi Tshushinki), whose sales rose steadily until 1940. 

Another of Fusi’s tasks in 1923 was selling S&H medical technology products. When Siemens-Reiniger-Veifa GmbH was in the process of being founded a year later, the associated sales activities were transferred to the Japanese company Goto Fuundu. In response to rising Japanese competition in medical technology, Siemens-Reiniger Werke AG (SRW) and Goto Fuundu agreed in 1932 to form a separate company to produce x-ray equipment. Production started in 1935 at a Tokyo plant specially built for the purpose.

A fresh start after an enforced shutdown – The Japanese business regains momentum 

Siemens and Japan were already finding it difficult to cooperate while World War II was still going on; the parent companies were unable to fill some orders, and the usual shipping routes for products were no longer available. Business shut down entirely once again in August 1945.

 

Siemens property was confiscated under the laws of the American Occupation, and in 1946 SSDKK, recently renamed, was liquidated. But the Japanese employees of the former SSDKK had the option of joining a company founded by Nobuo Kodera using his private fortune; in subsequent years this new entity – a stock corporation as of 1947 – watched out for Siemens interests. Fusi Denki and Fusi Tsushinki, for their part, were folded into a receiving company that got the new name Fuji in 1947. 

 

In 1951 the head of the corporate management department for international matters, Gerd Tacke, traveled to Japan to establish official contact with the companies in which Siemens had been invested before the war ended, or with which it had worked together. A reciprocating visit the next year yielded a set of contracts that would govern the future cooperation between SSW and Fuji Denki, and between S&H and Fuji Tsushinki. Siemens Japan Ltd., formed in the Japanese capital 13 years later, evolved by way of a number of intermediate steps into Siemens K.K. in 1977, with a setup whose details were all aligned with the corporate structure of the parent company. 

Like Siemens, since the mid-1960s Fuji Denki and Fuji Tsushinki had undergone multiple transformations, especially in light of changing market conditions and to allow for new lines of business. Fuji Tsushinki cooperated with the Furukawa Group, formed after World War II, to create Fujitsu Ltd., or Fujitsu KK, in 1967. Fuji Denki became Fuji Electric, a company that joined forces with Siemens in February 1980 to form a joint venture named Fuji Electronic Components Ltd. For Karlheinz Kaske, CEO of Siemens AG from 1981 to 1992, the parent company and its Japanese partners represented a family that reached across three generations:

 

“When I come to Tokyo, I have dinner with the Presidents of Fuji and Fujitsu: I’m the grandfather, Fuji is the father, Fujitsu is the son.” – Karlheinz Kaske, 1990

 

Since August 2010, Siemens Japan K.K. (SJKK) has been an integrated technology firm whose operations embrace medical technology, industry and energy. The Japan regional company has been headquartered since 2012 at a modern, earthquake-proofed high-rise complex in Central Tokyo. 

Innovative Siemens technology in demand – High-tech solutions for the 21st century 

Between 1999 and 2016, Siemens installed some 200 megawatts of wind power capacity in Japan. The company got its first order for direct-drive generating technology in the three-megawatt class from its Japanese customer Eurus Energy Holdings Corporation in 2013, for a wind farm in Akita harbor. Other projects for this customer followed, including the Eurus Yurikon and Eurus Higashi Yurihara wind power plants. 

 

In 2019, Siemens Gamesa signed an agreement with Japanese customer Obayashi Corporation for Japan’s first offshore wind farm project. The wind farm is to be installed in the northern region of Tokoku, and to have a capacity of up to 455 megawatts. SJKK too has been able to score in renewable power generation: in the summer of 2019 the company got an order to deliver a 75-megawatt steam turbine for a biomass power plant in Hirohata, along with associated components like the condenser, generator and instrumentation and control technology. 

The Biograph mBR PET-MR system, developed by Siemens – the first in Japan – has been in use at the International Medical Science Center at Fukushima Medical University since 2013. The special feature of this revolution in medical technology – which Siemens had presented to the public three years earlier – is that it can perform and record two scanning techniques simultaneously: magnetic resonance tomography (MR) and positron emission tomography (PET). Since the device delivers high-resolution body scans, doctors are hoping it will yield significant diagnostic advances. 

 

By 2024, Japan plans to be using smart electric meters exclusively. In 2019, Siemens implemented the EnergyIP smart grid solution at a Japanese customer for the first time, as a central platform for meter management using the Meter Data Management (MDM) application. The platform combines all the processing that gathers power consumption data with the MDM application and analyzes them for further use.

Dr. Claudia Salchow