Sankou Tech Mongolia manufactures mechanical parts for export to JapanThe Mongol Messenger
Ulaanbaatar /MONTSAME/. MONTSAME National News Agency is cooperating with the Embassy of Japan in Mongolia to introduce young business owners that are currently successful in the two countries’ business sector. This time, we invited Founder and Director of Sankou Tech Mongolia LLC Tsendeekhuu Chimedtseren. The company currently manufactures mechanical parts for vehicles in Mongolia, and exports them to Japan.
After working as a technical intern at the company, Sankou Seiki, based in Saitama, Japan for three years from 2001, Tsendeekhuu founded the company’s subsidiary, Sankou Tech Mongolia, in February 2005. By further developing the knowledge and skills he acquired during his technical internship, he has been successfully leading the company that manufactures high-quality car parts in Mongolia for 15 years. As of currently, Sankou Tech Mongolia manufactures 248 types of mechanical parts with 46 employees and 15 types of machinery and equipment - all of which are exported to Japan.
“Our goal is to supply 50 percent of mechanical parts being used for manufacturing cars in Japan”
Ambassador of Japan to Mongolia Kobayashi Hiroyuki: I heard that you had a technical internship in Japan. What was your reason for deciding to study in Japan?
Tsendeekhuu: I finished high school during Mongolia’s transition from a socialist society to a market system. Afterwards, I tried doing several jobs and fulfilled my military service before enrolling in university at the age of 23. Ever since I was little, I liked to do some tinkering here and there. Because I thought that engineers are needed in Mongolia, I studied to become an engineer at a university, and graduated in 2000. As it was difficult to find job opportunities as an engineer during the time, I had a job at the market in Darkhan city.
After about a month, my uncle suddenly called me and said, “People are being selected for a technical internship in Japan. Come here quickly.” My uncle was probably thinking about me since I was not able to find a job that I wanted. Right after arriving in the capital the next morning by train, I directly went to the exam venue - and passed it by luck. I then studied Japanese for over 10 hours every day for about half a year, and first went to Japan on January 19, 2001.
At the time, all that I knew about Japan was their good quality electronics such as TVs and cameras, vehicles, tall buildings that I saw on TV shows - a country with high technological development. My dream of going to a highly developed country to learn about technology was able to become a reality thanks to my uncle’s phone call. That was how my relations with Japan started.
Ambassador Kobayashi Hiroyuki: You mentioned that you worked as a technical intern at Sankou Seiki Co., Ltd. for three years in Saitama prefecture. During your internship, what were you able to learn, and what most intrigued your interest?
Tsendeekhuu: I initially worked as a CNC operator. In order to not make any errors and be productive, I did my best to learn all of the things they taught and develop my skills. However, the biggest hurdle was communication. I was not able to properly express myself because of the language barrier. On top of this, it also took a long time to get used to the Japanese lifestyle. Because of language difficulties, there were several times an issue would arise due to misunderstandings between the Mongolian interns and the company’s staff. And so the director’s wife Aiko began to teach us Japanese.
As we really wanted to become good at the language, we attended 90-min Japanese classes at 8.30 am even after our night shifts. Thanks to that, our Japanese language levels noticeably improved. And as a result, it became easy to communicate with the Japanese workers. I am ever so grateful for the director’s wife for helping us.
As for food, there was not that big of a problem because we made our own meals. Sometimes when the director invites us out for dinner, I used to tell him that I want to visit the white-bearded grandpa’s diner. KFC had yet to open in Mongolia at the time.
Ambassador Kobayashi Hiroyuki: What led to the decision to establish a company that manufactures mechanical parts in Mongolia? Could you tell us about your company?
Tsendeekhuu: Out of the six technical interns that arrived from Mongolia, there were only three of us - me, Khurelbaatar S. (currently the director of ESB Solar Energy Co., Ltd.), and another guy completed the 3-year internship. When we came back to Mongolia on January 16, 2004, we invited director Shimizu Takashi (currently the Board Chairman) to visit Mongolia in July, and he came to Mongolia around the time of the Naadam Festival. We brought the director to various tourist attractions to introduce Mongolia to him. On the night before his departure, he gathered all three of us and said, “Let’s do business together by using the language and skills you learned in Japan.” Although I suggested establishing a company that sells used cars and does Japanese-style repairs, we came to the conclusion that Japanese cars were too expensive for Mongolians, and that it was not suitable as a business at the time. Thus, the director suggested establishing a subsidiary of his company in Mongolia. And that was how Khurelbaatar and I were tasked to establish the company.
At the time, the regulation on tax exemption for entities with foreign investment for 5 years since its establishment served as a crucial boost, and the director’s dream of establishing a subsidiary abroad was able to become a reality when we established our company on February 16, 2005. As of currently, the company manufactures 248 types of mechanical parts with 46 employees and 15 types of machinery and equipment - all of which are exported to Japan.
Ambassador Kobayashi Hiroyuki: Although the business environment in Mongolia has significantly improved since the democratic revolution, I believe that there are not that many companies that have been consistently running operations for over 15 years. I assume that establishing relations with Sankou Seiki Co., Ltd. in Japan served as a crucial boost for the company. Even so, it is difficult to continue to run the business without manufacturing products that are satisfactory and meet the expectations of customers. What would you say is the secret to having the business be successful?
Tsendeekhuu: Our head company, Sankou Seiki Co., Ltd., provides a lot of support, which we are grateful for. Despite the temporary halt in operations due to the spread of COVID-19 infections, from the Board Chairman and the Director to the Factory Head and engineers at the company headquarters - everyone provides consistent support for our company. Moreover, in my opinion, a major reason for how we have been able to continue to run operations is how we are aware of our role as a supplier. In other words, our role in creating quality products that meet the customers’ demands. And of course, I should also note the support from other subsidiaries running operations in Mongolia, government organizations, our partner companies as well as the families of our employees.
Ambassador Kobayashi Hiroyuki: From my point of view, I see it as that there are only a few entities in Mongolia that export parts of machineries abroad. What do you think is the most important for the industrial sector in landlocked Mongolia to find success on the global market?
Tsendeekhuu: There are indeed a few companies in Mongolia (and especially in the sector of steel processing) that export mechanical parts for cars. On top of that, the global market is highly competitive. For our company, we have to adhere to the strict quality standards of Japan - which require an immense amount of responsibility. I personally believe that fulfilling our promises and constantly improving our skills by putting in our efforts would help in increasing our competitiveness.
And especially right now, the current pandemic situation has been having an impact on transportation. While products that need to be urgently delivered used to be transported by air, and those that were not as urgent were delivered by road and sea through China, 80-90 percent of our products are currently being delivered by air. Although this requires a significant amount of finances, we still have to deliver.
Ambassador Kobayashi Hiroyuki: What are your goals for the future?
Tsendeekhuu: In the next 5 years, we will work towards increasing the number of equipment and producing new products in order to increase our profits by 30 percent. To do this, we have to increase the number of workers as well. Our goal is to become a company that not only exports products to the Japanese market, but also makes its own contributions to the development of Mongolia with our technological capacities and human resources.
Ambassador Kobayashi Hiroyuki: What do you think is currently necessary to develop the economic cooperation between Japan and Mongolia?
Tsendeekhuu: In order to have active economic cooperation, laws and regulations are important. Laws need to be properly implemented rather than simply stating it on paper. I wish for an industrial zone to be established under the control of the Government in aims of having further active economic cooperation with foreign countries such as Japan. With the corresponding infrastructure issues resolved, the zone needs to be a favorable environment to attract foreign investment. By establishing an industrial zone, more opportunities will be created for similar companies that manufacture mechanical parts to run businesses. Furthermore, it is most likely necessary to create incentives such as tax discounts for a certain period of time until companies are able to run stable operations on their own.
Tsendeekhuu: Mr. Ambassador, you probably know well about the business environment in Mongolia. What kind of policy do you think is necessary to attract foreign investment to Mongolia? In your opinion, what sector has the most chance of success?
Ambassador Hiroyuki Kobayashi: Although this goes without saying in the business sector, I wish for all sides to fulfill their promises as there are certain cases where payments are not paid on time or for one side to violate the terms and conditions of the agreement. As for sectors, I believe that a sector that produces goods and products that are unique to Mongolia may attract foreign investment, even if the conditions at the time may not be as favorable.
On the other hand, sectors producing goods and products that can be produced in any country can face a lot of difficulties, such as transportation costs depending on the region.
To attract foreign investment, I think it is important to fully understand that Mongolia is competing with other countries. As Mongolia is rich in minerals, developing this resource may be a reasonable solution for the sector. Furthermore, in connection with how climate change has become a global pressing issue, another solution would be to utilize renewable energy. On top of these, I should also note the great potential for environmentally-friendly sectors that have stable operations, such as farming, animal husbandry, IT, and tourism.