Molex in Japan: How This Maker of Electronic Connectors Grew to $500 Million in Revenue in Japan | Print |
Session I: Perspectives on Regional Opportunities and Business Strategy
  • Mr. Dave Johnson, Chief Financial Officer, Molex, Inc.

Mr. Johnson illustrated why Japan is so central to Molex’s business and also gave business insights from Molex’s nearly 40 years in Japan.

Molex is based in the Chicago area and has been in business for almost 70 years, founded in 1938. Molex’s connectors transmit signal or power between devices and are used inside everyday parts like cell phone chargers, power cords for laptops, and printer cords. Mr. Johnson guessed that everyone in the audience probably uses quite a few Molex connectors on a daily basis. Involved in just about every major industry, Molex is now a $3.3 billion company with 32,000 employees worldwide, 45 locations around the world, 8.8 million square feet of manufacturing space, and a catalog of 100,000 different products.

Moving on to Molex’s beginnings in Japan, Mr. Johnson described how, similarly to Boeing, the Japanese customers at first would not import Molex’s connectors. So Molex went to Japan itself and set up a joint venture with a Japanese company in 1970. At the time, Japanese laws did not permit the creation of wholly-owned subsidiaries by foreign companies, so Molex entered the market by forming a joint venture with a Japanese company. Then within a year, Molex became a wholly-owned subsidiary, one of the very first foreign-affiliated companies to do so.

The first key point Mr. Johnson illustrated about doing business in Japan was how Molex leveraged its Japanese business to begin operations in other areas of Asia. In 1983, Molex expanded to Hong Kong by first shipping its Japanese connectors there. This entry served as the company’s foray into China, a huge market for the company today. In 1984, Molex went to Korea, where the state of technology was about five years behind that of Japan, so Molex was able to sell its older products from Japan to Korea. In 1987, Molex began business in Malaysia by supporting its Japanese customers who had moved there. Today, Molex’s revenue from Japan stands at about $500 million, supported by 2,100 employees and nearly 250 engineers. More recently, Molex has begun making micro miniature connectors out of Japan, a technology for which the company is world renown.

The second point Mr. Johnson highlighted was how Molex takes advantage of the practices gained in Japan and incorporates them into its product technologies around the world. Molex in Japan manufactures its products in plants located in Okayama, Shizuoka, and three in Kagushima. Technical headquarters are maintained at Yamoto. Molex takes the technologies learned from production in Kagushima, spreads them to its other plants in Japan, and then spreads those best practices to other parts of Molex worldwide. Mr. Johnson noted that Molex owes much of its success to its Japanese customers. “One of the things that have really propelled our success for all of Molex has been the quality of our customers in Japan,” said Mr. Johnson. “The Japanese customers are very, very demanding from a quality perspective…[and] we’re able to export that [quality] to other parts of Molex, which certainly is one of the most valuable things that we gain from our best practices in Japan.” In addition to quality standards, Molex also spreads environmental standards gained in Japan. “Another area where our customers are very demanding is environmental awareness and standards in Japan,” he said. “Again, we have taken our customers’ pressure on us to improve our standards and then export that to other parts of the company.”

To illustrate further how important Molex’s Japanese customers are to the company, Mr. Johnson showed that 15 out of the top 35 of the Molex’s top customers are either Japanese customers or have significant design activity done by Molex’s Japanese organization. “I would say that virtually all the customers on the list probably buy some connectors from Molex Japan,” said Mr. Johnson. “It really shows how critical the Japanese business is to our overall business.”

In closing, Mr. Johnson summarized the factors that have contributed to Molex’s success in Japan:
  1. Early market entry. “We went into Japan at a time that was earlier than others, and it was clearly one of the keys for our success.”
  2. Act like a Japanese company. “’Think global and act local’—we really did that…Our top senior management team [in Japan], from the beginning until now, has always been Japanese…People thought that Molex Japan was a Japanese company.”
  3. Let the Japanese business run in its own way. “We allowed our Japanese business to do things their own way,” rather than micromanaging from headquarters.
  4. Leverage technology gained in Japan. “Importantly, we have learned to leverage our Japanese technology. We’ve learned to leverage [the production technology] gained from our Japanese customers to other parts of Molex, and that has been a major part of our success.”

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Note: The above summary is an adaptation of the speaker’s presentation. Contents and quotes may not be entirely accurate.